Home > 45 workers cut as Poseidon Nickel suspends drilling

45 workers cut as Poseidon Nickel suspends drilling

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article image Forty-five contractors have been cut at Andrew ‘Twiggy’ Forrest’s Poseidon Nickel project.
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Forty-five contractors have been cut at Andrew ‘Twiggy’ Forrest’s Poseidon Nickel project amid speculation a bid to reopen the Western Australian mine has been hamstrung by financing issues.

Sources close to contracting businesses at the site said 45 workers were "completely shocked" at being told their jobs had been cut on Tuesday after Poseidon suspended drilling at the site.

"They even woke up people who were on night shift to tell them they'd been sacked," one worker told The Australian.

Job roles made redundant include shift bosses, geologists, drillers, field assistants, cleaners and caterers.

At a meeting, workers were told technical problems involving dewatering had forced the shutdown.

The halting of drilling works at the mine this week comes after Forrest failed to secure the $200 million needed to finance the project after a trip to New York last month, causing some to speculate the shutdown is a bid to preserve cash.

However chief executive of the project David Singleton denied this.

"We've got to the end of the original campaign, we're going into a bit of a pause and then we're going to restart again,” he said.

"We've told them (contractors) that our expectation is we'll restart in the next couple of months or so.

"The reason for the gap is we find that so much data comes in so quickly, that the geologists get so caught up in dealing with the data that they don't get enough thinking time."

Singleton said he was optimistic the company could raise the finance it needed in the US despite dipping commodity markets.

"This is probably as bad a commodity market as you could ever get to do this sort of thing," Singleton said.

"The feedback we got (in the US) is that we tick all the right boxes, and the reason they say that is it's in Western Australia -- it's not in some place you've never heard of.

"We believe there is a big upside to nickel coming -- just about every analyst in the world is now saying (that).

"The feedback we got was that commodity projects are not the most favoured at the moment, but if a project is going to get done, this is the sort of project that's going to get done."

Poseidon confirmed plans to reopen the mine in April, after a study confirmed the viability of the $197 million project.

The mine is expected to produce an average of 9,600 tonnes annually over its 10-year life span.

The deposit, 260 kilometres north east of Kalgoorlie operated as a mine between 1974 and 1995.

Australian Mining reported yesterday that falling nickel prices continue to put pressure on producers as the price dropped to just above $6 per pound.

“Prices are going to bump along the bottom of this trough until the end of the year," said Mark Pervan, head of commodity research for Australia & New Zealand Banking Group, The Wall Street Journal reported.

 "I don't see a catalyst for a pickup in demand out of China over the next six months."

Business commentator Tim Treadgold said the decline was set to create tough times for nickel producers.

"It's extremely difficult for any nickel mine or processing plant to survive when the nickel price gets down to six dollars or below, which is where it's plunged to in the last few weeks," he said.

Vicky Validakis

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