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UPDATE 1-Colombia's Cerro Matoso ferronickel mine partly reopens

Thu, 10th Oct 2013 20:15

* Ferronickel mining, processing resumes partially

* Company says renegotiating with indigenous groups again

* Global nickel market pressured by large stocks

BOGOTA, Oct 10 (Reuters) - Colombia's Cerro Matoso, the world's No. 2 ferronickel producer, partially restarted operations on Thursday after protesting indigenous groups lifted their blockade of the mine's entrance.

Cerro Matoso, owned by mining multinational BHP Billiton , supplies 4 percent of the world's ferronickel. A surplus of nickel, the metal derived from ferronickel, has driven its price down around 20 percent so far this year.

News of the mine's closure on Wednesday helped London-traded nickel contracts to firm on Thursday to $13,750 a tonne, up from a closing price of $13,660 per tonne in the prior session.

The intervention of the regional and national governments made it possible to resume dialogue with indigenous community leaders and restart both mining and on-site industrial processing operations, the company said in a statement.

"Cerro Matoso trusts that this rapprochement will make it possible to normalize completely all the company's operations," it said.

The company has not explained the reasons for two weeks of protests by the indigenous groups, but a mining ministry source told Reuters the demonstrators were seeking compensation for pollution from the mine which they say has damaged their health.

Colombia's ferronickel production surpassed 47,000 tonnes in 2012, according to National Mining Agency data.

Colombia's mining sector, much of whose output is still extracted by artisanal or illegal miners, has attracted a lot of investment, together with the oil sector, helped by a vast improvement in the country's security situation. A decade-long U.S.-backed offensive against the country's left wing guerrilla groups, the FARC and smaller ELN, has slashed their numbers.

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