Norilsk Nickel halts output at Cawse nickel operation

LONDON, Oct 17 (Reuters) - Norilsk Nickel said on Friday it will halt production at its Cawse laterite nickel operation in Western Australia because of higher costs and lower metal prices.

The facility, which has been put on indefinite care and maintenance, has been operating under increasing cost pressures for some time, the world's biggest nickel producer said in a statement.

"Significant increases in the cost of inputs coupled with a steep decline in nickel prices have lead to the decision to stop production indefinitely," it said.

The company will examine disposing of the operation as one of its options and said it is considering a range of alternatives for its workers.

A number of mining companies have been forced to reduce output and delay future projects as nickel prices fell close to or below marginal costs.

London Metal Exchange three-month nickel MNI3 has slumped almost 80 percent since reaching a record high of $51,800 a tonne in May 2007, amid falling demand from stainless steel producers, and prices have been below $20,000 since Sept. 2.

Production at Cawse was suspended in June because of a disruption in gas and sulphuric acid supplies.

Norilsk Nickel said the decision does not affect its other Australian nickel operations at Black Swan, Lake Johnston and Waterloo which continue to perform well, in line with expectations.

(Reporting by Julie Crust; editing by Peter Blackburn)