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The Cerro Matoso mine, in Colombia, a major ferronickel producer, is undergoing a strategic review in response to ongoing nickel market shifts that are putting pressure on prices.

South32, the mine’s owner, announced that the review aims to “evaluate options to enhance its [Cerro Matoso’s] competitive position”.

According to the company’s second-quarter production report, price realisations for its ferronickel product currently exhibit a 29% discount to the LME nickel index, reflecting the impact of structural changes in the nickel market on both nickel prices and discounts to its ferronickel product.

Nickel prices have dropped sharply over the past year, as new supply from Indonesia entered the market. Several mines across Australia have had to restructure.

Last week, BHP announced that it was evaluating options at its Nickel West mine and First Quantum scaled back operations at Ravensthorpe. Panoramic Resources’ administrators are shutting down the Savannah project, while IGO has flagged impairments at its Cosmos nickel project.

First Quantum has said it expects the downturn in nickel prices to last three years.

Cerro Matoso’s payable nickel production decreased by 10% to 18 300 t in the December 2023 half year, but is on track to produce about 40 500 t, in the full year, with higher nickel grades expected in the June 2024 half year.