SYDNEY (Commodity Online): Nickel prices may witness some churning in the coming days as BHP Billiton, a mining giant, has been forced to suspend production of nickel briquettes at its Kwinana refinery after running out of hydrogen.

With the onsite hydrogen plant broken and the usual back-up supplies from BP unavailable, BHP had no choice but to close down refinery operations this week.

The refinery may remain shut for sometime and it will have a huge impact on the production targets for BHP’s Nickel West unit.

The refinery is the final link in Nickel West’s production chain. Nickel concentrate from mines at Mt Keith and Leinster, in the northern Goldfields, is smelted at the Kalgoorlie Nickel Smelter and turned into nickel matte.

About two-thirds of the matte is railed to Kwinana for refining using an ammonia leach process into London Metal Exchange-grade nickel briquettes.

The refinery is capable of handling 65,000 tonnes of nickel metal a year. Two years ago BHP used the WA gas crisis resulting from the Varanus Island explosion as an excuse to carry out a major refurbishment of the nickel smelter.

Nickel is making a comeback, having experienced a savage price fall during the global financial crisis and forcing BHP to mothball its $2 billion Ravensthorpe laterite development.

LME nickel was worth $21,900 a tonne this week, having risen from $17,000/t just six weeks ago.

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