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To: LoneClone who wrote (34744)	3/26/2009 10:11:36 PM
From: LoneClone	Read Replies (1) \| Respond to of 193918

UPDATE 1-China steel firm axes Indonesian nickel project Thursday March 26, 2009 05:34:54 EDT hk.quote.com By Polly Yam HONG KONG, March 26 (Reuters) - A $500 million nickel pig iron project planned for Indonesia has been scrapped, a senior official at Shanghai Tsingshan Mineral Company Ltd, the majority partner in the venture, said on Thursday. The deal had fallen through because the local government wanted to take back mining rights, Jiang Xinfang, president director of Tsingshan, a subsidiary of the country's top private stainless steel producer Tsingshan Holding Group. 'The project was called off in August-September last year,' Jiang told reporters on the sidelines of a ferro-alloy conference in Hong Kong, adding that weak nickel prices had also triggered the termination. The Chinese company holds a 51 percent stake in the project on Obi island in North Maluku in Indonesia, and is partnered by Indonesian state-controlled miner PT Aneka Tambang, in the operation which would have produced 30,000 tonnes of nickel in pig iron (NPI) annually. Tsingshan group is building a nickel pig iron plant in Fujian province in China with capacity of 15,000-20,000 tonnes of nickel in pig iron annually, he said. The building would be completed in Oct and the capacity would be expanded in the future. NPI is used in the production of stainless steel for which China is the world's top producer, and priced with nickel, which has lost more than 80 percent from 2007's all-time high. Tsingshan produces NPI for its stainless steel production without using iron ores. CHINA'S NPI OUTPUT FALLS Jiang predicted the country's NPI production would fall to 20,000-30,000 tonnes of nickel in pig iron this year due to weak demand and low prices, from about 86,179 tonnes last year. The prediction is lower than the forecast by Bonnie Liu, a China-based commodity research analyst at Macquarie Bank, who told the same conference that China's NPI production would be below 50,000 tonnes of nickel this year. Jiang said more than 7.5 million tonnes of imported laterite nickel ore, used to produce NPI, were stored at main Chinese ports and the bulk had been imported at high prices in past the two years and contained less than 1.7 percent of nickel. Those stocks are equivalent to more than 60 percent of China's imports of nickel ores and concentrates last year by volume. 'Many NPI plants have cut output or shut,' Jiang said. He added low prices were likely to delay start-ups of some new NPI projects. Nine NPI projects, including Tsingshan's Fujian project, with a total of 210,000 tonnes of nickel in pig iron annually are under construction. China's stainless steel mills might cut production in the second and third quarters if demand remained weak, which could cut NPI consumption, Jiang predicted. That consumption was over 70,000 tonnes of nickel in pig iron last year in China, Jiang said. But Tsingshan planned to produce more stainless steel this year to feed its production of long products such as bars and wire rods. The firm aimed to produce 800,000 tonnes of stainless steel this year, up from 670,000 tonnes last year and 500,000 tonnes in 2007, Jiang said. (Editing by Ben Tan) ((polly.yam@thomsonreuters.com; +852 2843 6933; Reuters Messaging: polly.yam.reuters.com@reuters.net)) Keywords: NICKEL TSINGSHAN/INDONESIA (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com)