Canada's First Quantum Minerals (FM.TO) said on Monday it will cut production at its Australian nickel mine due to a "significant" downturn in prices of the metal last year, resulting in a 30% reduction in the operation's workforce.
The Raventhorpe mine in Australia, jointly owned by First Quantum and South Korea's POSCO (005490.KS), generated $279 million in revenues and an operating loss of $66 million in the nine months ending Sept. 30, 2023. The company processed 5,490 tonnes of nickel ore in the third quarter.
Nickel prices have dropped by 43% since January 2023 due to a combination of high supplies and low demand of the metal. It is currently trading at $16,460 per metric ton.
The Australian mining operation employed about 650 people, Western Australia's state government said in a press release in 2021.
Shares of Toronto-based First Quantum were up 1.5% at C$13.35 on the Toronto Stock Exchange on Monday. The stock, however, is still down about 50% since street protests shuttered the company's Cobre Panama copper mine in the Central American nation in December.
That project, one of the world's biggest and newest mines, accounted for about 40% of First Quantum's revenues. The company has been in talks with investors to raise funds to bolster its finances.
Rating agency Fitch has warned that if the Panama mine was permanently shut, First Quantum's net debt leverage ratio in 2024 would increase to more than five times earnings before interest, tax, depreciation and amortization, which could result in a covenant breach.
