Norilsk takes another hit in WA – by Nick Evans (The West Australian – April 15, 2013)

http://au.news.yahoo.com/thewest/business/

Russian mining giant Norilsk Nickel has taken another hit to its Australian assets, announcing further writedowns as it prepares to close its remaining WA mine.

According to an abbreviated set of 2012 financial accounts released by Norilsk late on Friday, the world’s biggest nickel producer has written down the value of its Australian and Botswana mining assets by $US278 million ($264.7 million). The company did not apportion the writedowns.

It spent $7 billion expanding in WA nickel at the height of the mining boom in 2007 and is understood to have now written off the vast bulk of the assets it acquired.

The carrying value of its non-current assets in Australia was put at $US511 million at the end of 2011. That figure is understood to have fallen to about $US350 million by the end of last year.

Media reports in Botswana indicate Norilsk may also be preparing to close its nickel mines there, after senior management decided to mothball its Lake Johnston project, north-east of Kalgoorlie, late last month.

Although the company is known to be preparing to close the WA mine after April 22, staff who spoke to _WestBusiness _ last week said they had still not been formally told of the closure. There were concerned they had yet to be advised of redundancy and termination payments.

Norilsk is believed to owe as much as $30 million to local creditors that have provided goods and services to Lake Johnston.

Those creditors include mining services company Inter Mining, which is part-owned by Norilsk and responsible for managing the project’s mining and equipment hire contracts.

Although sources say Norilsk is still processing payments, it is still not clear whether its Russian parent will cover all of Inter Mining’s local obligations.

Norilsk’s net profit fell 41 per cent to $US2.14 billion in the year to December 31, with revenue down 15 per cent to $US12.1 billion. As well as the writedowns, the company also recorded losses of $US552 million on its share portfolio, mostly because of falling Russian stocks.

Norilsk came to WA in early 2007, buying OM Group which owned the Cawse nickel project in the Goldfields, for $US408 million. Just months later, it beat Xstrata with a $US5.8 billion bid for Canada’s LionOre Mining. LionOre’s WA mines included Emily Ann, Maggie Hays, Waterloo and Black Swan.

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