Worldwide nickel prices have surged to their highest since 2012 over concerns following a tailings spill and subsequent plant shutdown by Brazil’s Vale S.A. in the South Pacific island nation of New Caledonia. Processing ceased after an “acid-containing solution” entered Cory McPhee, a nearby creek, said officials at the No. 2 mine.

The Rio de Janeiro-headquartered giant suspended 80% of production while planning a total closure by Friday’s end; global prices, said an analyst cited by Reuters, have accordingly increased 6%. About 3,500 workers were affected, according to Vale, including 1,300 employees, and the remainder are subcontractors.

After ordering the stoppage, meanwhile, New Caledonia southern provincial authorities said legal proceedings are under way for environmental code violations as the spill killed some 1,000 fish; swimming and fishing, they added in a statement quoted by Reuters, is temporarily suspended in the area.

The local government did not say when Vale could resume operations, but noted pollution had been contained to the single river. A Toronto-based company spokesman said water quality has since normalized amid expectations of production resuming “shortly,” in a statement quoted by Bloomberg. With 250,000 inhabitants, New Caledonia is an overseas territory of France and lies 750 miles east of Australia.

In Q4, Vale announced plans to produce 40,000 metric tons (mt) in 2014 at the site, previously named Goro. China and Japan are scrambling to secure supplies as fears of shortages have bolstered demand for refined metals and long-term ore contracts; pressures are accentuated by an unprocessed ore ban by Indonesia, which supplies more than 25% of global supply.

 

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