PERTH (miningweekly.com) – The Tasmanian government at the end of last week announced a support package to bring the Avebury nickel mine back into production.

Resources Minister Paul Harriss said the reopening of the Avebury mine, which had been on care and maintenance since 2009, would represent a significant boost to the West Coast community after several setbacks to the local economy in recent years.

Metals miner MMG in April last year agreed to sell its Avebury nickel mine to a privately owned exploration company in Perth, in a deal valued at A$40-million.

The transaction comprised a A$1.75-million deposit, A$33.25-million closing payment, A$2.5-million payable on production of the first 10 000 t of nickel in concentrate and A$2.50-million payable on production of the second 10 000 t of nickel in concentrate.

The sale would be finalised by the end of the month, as new operator Avebury Nickel Mines (ANM) moved to secure financing.

ANM and the West Coast Economic Working Group approached the Tasmanian government for financial assistance, to assist in reopening the mine.

State Growth Minister Matthew Groom noted that the package included a grant to ANM for 50% of the stamp duty on the purchase price from MMG or A$900 000, whichever was the lesser amount, as well as a grant for up to A$2.6-million to reimburse all of the payroll tax paid on positions at the Avebury mine for two years.

“Following the substantial commencement of operations, the government has also committed to considering a limited mining royalties deferral,” Groom said.

The Minister noted that the support package was conditional on ANM raising the capital needed to complete the purchase and upgrades necessary to resume mining.

“Investments like Avebury mine are needed to strengthen the economies of remote areas, underpinned by improved infrastructure, skills training and access to new markets. Continued investment in core mining and mineral processing, primary industry and tourism sectors will underpin any local economic development strategy for the immediate future."

The reopening of the mine was expected to create about 200 new jobs.

“The West Coast has a heavy reliance on mining production, which has been dramatically affected by the downturn in global commodity markets and the destruction of the forestry industry.

“The government is keen to see the resumption of activity at Avebury mine.  We believe that the exports from the mine added to the employment created will provide a much needed boost for not only the West Coast but the whole of the state’s mining sector,” Groom said.