The £28billion Xstrata, at the forefront of industry consolidation after recently making a £5billion approach for platinum producer Lonmin, expects the shutdown to last about four months. It said oil made up most of the site’s costs.

Nickel prices have fallen about 11 per cent during the past month.

Xstrata will use the shutdown to carry out furnace repairs and maintenance at Falcondo, where annual nickel capacity is 29,000 tonnes.

It will also accelerate feasibility studies into an energy conversion project, switching from oil to coal.

Chief executive Ian Pearce said measures to alleviate the impact of record oil prices at Falcondo had saved about $20million.

“The suspension will provide us with an opportunity to further advance the energy conversion project, critical to ensure the long-term future of Falcondo as a stable producer throughout the nickel and oil-price cycle,” he added.

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