http://www.thewest.com.au/default.as...

9th October 2008, 9:00 WST

Minara Resources, Australia’s second largest nickel producer, says the outlook for the steel hardening commodity is positive after posting a rise in output for the third quarter.

Nickel production from the Murrin Murrin operation in WA during the three months to September 30 climbed 14.7 per cent on the previous corresponding quarter to 7656 tonnes.

The company reiterated its full year production forecast of 31,000 to 35,000 tonnes, but stressed output would be “at the lower end of the range”.

Minara said the nickel market continues to be volatile, but market fundamentals are expected remain sound.

The company forecast a “positive” outlook in the mid to longer term.

“Going forward we believe that the nickel market will stabilise and some of our input costs will return to normal levels,” Minara chief executive Peter Johnston said in a statement.

Minara said there had been a significant weakening in the sulphur spot market over the past two months and that the company expected the decline to continue.

Sulphur is a key input used in the processing of some nickel ores.

Minara holds 60 per cent of the Murrin Murrin operation, with commodities trader Glencore International holding the balance.

Shares in Minara dropped 11.5 cents, or 11.39 per cent, to 89.5 cents by 8.56am.

AAP