The Philippines' Berong Nickel Corp said on Thursday it has temporarily stopped nickel production amid poor demand and falling prices and has cut more than 600 jobs.
Berong Nickel, in which London-listed Toledo Mining Corp has a 56.1 percent stake, said it has more than enough stock to ship to client BHP Billiton.
Berong has an agreement to supply up to 500,000 tons of nickel laterite ore to BHP annually until 2013.
BHP only agreed to buy 400,000 tons of nickel laterite ore for 2009 and negotiations to raise the annual volume to 1 million tons were unsuccessful, Berong shareholder Atlas Consolidated Mining and Development Corp told Manila's stock exchange.
"With more than enough stock to meet the initial shipments to BHP Billiton, all production activity at Berong has ceased for the time being," Atlas said, adding more than 600 employees and contractors were laid off and fewer than 50 staff were still employed in the mine site.
Atlas said half of the 400,000 tons intended for BHP can be supplied from stockpiles, "which means full-scale mining operations can be deferred until the second half of 2009."
The first shipment to BHP is scheduled for April, followed by monthly shipments, it added. Apart from BHP, the Berong project, potentially the world's fourth-largest nickel laterite resource, was shipping ore with an average grade of around 1.5 percent to producers in China although shipments to that country had fallen.
Nickel, a key ingredient in making stainless steel, was trading at $10,250 a ton by 0944 GMT on the London Metal Exchange, less than a fifth of its all-time high of $51,800 reached in May 2007.
The Philippines sits atop an estimated $1 trillion worth of mineral wealth but investments have slowed to a trickle as miners rethink their plans amid the global economic slowdown.
European Nickel holds an 18.7 percent interest in the Berong deposit on Palawan island while Atlas Mining owns 25.2 percent.