Brazilian multi-national metals and mining firm Vale has suspended operations at its Goro nickel processing plant and mine in New Caledonia, due to an effluent spill.
New Caledonia Southern Province president Cynthia Ligeard ordered an immediate halt to the operations at the site due to an effluent spill containing acid, according to a news report from Radio New Zealand International.
Vale was quoted by Mining Australia as saying that the spill was due to a misconfiguration of circuits transferring the solution between two of its retention ponds.
Vale did not confirm what the spill contained but said that the company was working to limit the damage caused, and conditions have returned to normal.
The company is now waiting for signal from the local government to resume operations.
In November 2013, Vale said it expected the Goro plant to produce 40,000t of nickel in 2014, and on 1 May of this year, Vale CEO Murilo Ferreira said that the nickel mine in New Caledonia was performing well and meeting expectations.
However, the shut down affected the estimates, as nickel prices on the London Metal Exchange (LME) had already increased 6.1% to $19,786 per tonne, the highest since March 2012.
The increase in nickel prices was mainly due to the Indonesian ore export ban and sanctions against Russia that hit its top refined producer Norilsk Nickel.
Morgan Stanley analyst Joel Crane was quoted by Reuters as saying that, while Goro has a capacity of 60,000t, its production is much smaller due to technical difficulties.
"Physically, it doesn't do a lot to the market, but sentiment-wise I am sure it will help. The perception of severe tightness is driving prices," Crane said.