Western Areas yesterday opened its second mine on the site, 400km east of Perth, but said new deposits would face a higher hurdle to bring it into production if the resource super-profits tax was introduced.

 

Western Areas director Craig Oliver said Australian banks would "certainly not" provide the $100 million needed to develop its third potential mine, the Diggers South deposit. He said the company would need to look for foreign investors. "At this point Diggers can't go ahead with this tax in place," Mr Oliver said.

 

He rejected earlier assertions by the Rudd government that Diggers South, with a 1.5 per cent nickel grade, was already marginal.

 

Early last month Western Areas issued a letter to shareholders announcing that in light of the proposed mining tax, the board was reconsidering whether to start development of Diggers.

 

"Diggers was hard before; Diggers is all but impossible now," Mr Oliver said yesterday.

The company yesterday announced the opening of the $30m Tim King open pit at the Spotted Quoll mine, with a nickel grade of 5.1 per cent in reserves, and the $25m upgrade of its Cosmic Boy concentrate plant.

 

Spotted Quoll is due to produce 10,000 tonnes of nickel in concentrate annually, to be shipped to the Jinchuan steel company in China.

 

The existing Flying Fox mine is due to ramp up from 10,000 tonnes to 15,000 tonnes, with all the produce going to BHP Billiton's Kambalda nickel refinery.

 

The company aims to produce 25,000 tonnes of nickel in 2011, which would make it the third-largest producer in Australia. Western Areas managing director Julian Hanna said the company had two of the highest-grade nickel mines in the world but the "onerous" mining tax would make future expansion much harder. "This tax immediately poisons your decision making process," Mr Hanna said. He said the Rudd government had not factored in the volatility of nickel prices when it decided the tax should apply to all resources.

 

Sourced from Internet.