2 Apr 2007

Analysts expect delay in New Caledonia's two nickel projects

6:10 am on 2 April 2007

Business analysts say they expect major delays in the development in New Caledonia's two nickel projects which are among the largest in the world.

The Goro Nickel company says it is planning a number of improvements in environmental and other key areas, which it says won't affect its launch.

The new major shareholder of the second project, Koniambo, is currently assessing its costs and is cautious yet determined that production will start by 2010.

However, a senior analyst at Intersuisse Ltd, Peter Arden, says substantial delays are almost certain.

"It is most likely that the project will be considerably further delayed. I don't think we will see an early resolution and one thing about this is that costs have gone up dramatically. The owners will be cautious about committing to the project. They will take their time to make sure everything is organised and done on a satisfactory basis."

Peter Arden predicts this will have a major impact on the global market and stresses nickel prices will spiral up due to a shortage of supply.

The director of the analysis group, Citigroup, also says he expects further delays.