Xstrata Shuts Falcondo Ferronickel Mine Due to Market

Swiss-based miner Xstrata plc said on Tuesday it was suspending operations at its Falcondo ferronickel mining operation in the Dominican Republic, as a result of market conditions.

"This is due to a combination of extremely high oil prices, which represent the majority of the site's costs, and lower nickel prices," Xstrata said in a statement.

The shutdown is anticipated to last four months, during which time furnace repairs and crucial maintenance activities will be conducted, the company said.

"The resumption of activities will be assessed based on market conditions, which are expected to improve towards the end of 2008," Ian Pearce, chief executive of Xstrata Nickel, said.

"The suspension will also enable the acceleration of feasibility studies into the energy conversion project, to switch the operation's power source from oil to coal, and the development of the Loma Miranda project, which will provide a new higher-grade mining area for Falcondo and extend the mine life," Xstrata said.

By Dan Lalor, Reuters .