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Nickel prices jumped Tuesday on the news of production setbacks at the troubled Goro nickel mine, which has one of the world's largest deposits and is partially owned by Trafigura Group and backed by Tesla Motors, reported Bloomberg.
Goro is located in the South Pacific island French territory of New Caledonia. The mine has been forced to curtail production following a leak from its tailings dam -- an earth-fill embankment dam used to store byproducts after separating the ore from mining waste.
A spokesperson from owner Prony Resources said the Goro Mine reported a "limited release of salt-laden liquid" following torrential rains in August. Corrective measures required by local authorities reveal nickel output would be reduced in the fourth quarter.
The nickel market has seen wild price swings in the last two sessions following reports of an explosion at a nickel factory in Indonesia on Monday, which sent prices skyrocketing 15%, though prices retreated after the owner of the operation denied reports.
Prices on the London Metal Exchange jumped as high as 7.5% to $31k per ton on Tuesday, hitting the highest level since May.
Nickel prices trading on the LME have seen increased volatility. In March, the LME halted trading for a week after prices soared 250% in two sessions.
Brazilian miner Vale SA previously owned Goro. It was sold last year to Prony -- a group comprising Trafigura, Agio Global, and the New Caledonian government.
The good news is that "minimum quantities required by our customer contracts will be met, and we expect to be at full capacity again shortly," Prony said.
Global supply tightness for the battery-critical making metal comes as electric-vehicle demand soars. This will undoubtedly keep the costs of EVs out of reach for the average person.
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