Eramet Reviews Investments,Likely To Delay Some Projects -CEO
Sun. November 23, 2008; Posted: 09:56 PM
tradingmarkets.com
SYDNEY, Nov 23, 2008 (Dow Jones Commodities News via Comtex) -- ERMAF | Quote | Chart | News | PowerRating -- Poor nickel prices and financial market upheaval have prompted French metal producer Eramet S.A. (ERA.FR) to review investments across the business, and the company will likely delay some projects, Chief Executive Patrick Buffet said in a recent speech.
Nickel prices have fallen to around US$4 a pound recently, from around US$15/lb at the start of the year.
While prices have stabilized around US$4.50/lb for now, this still means Eramet's nickel production on the French-controlled island of New Caledonia is losing money, said Buffet.
Demand from the global stainless steel sector is expected to be even lower during the fourth quarter compared with an already weak third quarter, he added.
"Investments across the group are currently undergoing a strategic review in light of market conditions. In some cases, we will look to significantly cut the cost of certain projects, and for some, a delay will be inevitable," said Buffet.
A new power station for its Doniambo nickel smelter in New Caledonia may become the first project to face a delay, but Buffet reiterated his long-term interest to develop the Pony nickel deposit in the southern part of the island, registering for an exploration license in July.
Given production cutbacks by stainless steel producers of up to 50%, the company risks not selling all of next year's nickel output if it goes ahead with current production plans, said Buffet, without specifying next year's output target.
Long-term, the nickel producer seeks to annually churn out 72,000 metric tons of the stainless steel ingredient by 2013.
Eramet has already reduced output at its Doniambo smelter to 52,000 tons for 2008, down around 13% from last year, and down from a targeted 55,000 tons.
-By Elisabeth Behrmann, Dow Jones Newswires; 61-2-8235-2965; elisabeth.behrmann@dowjones.com
(END) Dow Jones Newswires
11-23-08 2156ET |
