UPDATE: Norilsk To Suspend Black Swan, Lake Johnston Mines

Russia's Norilsk Nickel (GMKN.RS) said Monday it will suspend the remaining two mines at its Australian nickel operations because of low prices for the metal rendering the operations unsustainable.

Norilsk will suspend the Black Swan and Lake Johnston mines effective immediately, cutting staff by around 330 from March 1 to leave only a small number of employees to manage the sites under care and maintenance.

Last year, the two mines together produced around 25,000 metric tons of nickel in concentrate.

Norilsk owns a number of mines in Western Australia with production just under 30,000 tons annually. Norilsk bought U.S.-based OM Group's nickel business for US$408 million in 2007 as well as taking over Australia's third-largest nickel miner LionOre Mining International Ltd. for US$6.36 billion, when nickel prices were at record highs.

In November, the global number one nickel miner shut its Cawse and Waterloo operations, also because of the ongoing slump in metal prices.

Australian nickel miner Western Areas N.L. (WSA.AU) also Monday said it had restructured its ore offtake deal with Norilsk, instead relying on its own concentrator that is in the ramp-up phase.

Nickel is primarily used to make stainless steel, with global steel prices falling by about 40% during the course of last year.

After hitting record highs in excess of US$50,000/ton - prices in mid-2007 - nickel plunged to a five-year low of US$8,850/ton in October last year, forcing many operations to shut down.

Earlier this year, BHP Billiton Ltd. (BHP) announced it would shut its 50,000-ton Ravensthorpe nickel laterite operation, taking an impairment charge of US$3.36 billion from the project that it only commissioned last year.

-By Elisabeth Behrmann, Dow Jones Newswires; 61-2-8272-4689 [e-mail]