Kennecott gets initial OK for Michigan nickel mine

Kennecott Eagle Minerals Co., a unit of Rio Tinto Group Plc, said it received initial environmental approval from the state of Michigan to build what would be the only primary nickel mine in the U.S.

The state's Department of Environmental Quality gave its preliminary endorsement for a permit to build and operate a $150 million nickel and copper mine in Michigan's Upper Peninsula, the company said Tuesday in a statement.

London-based Rio Tinto, the world's third-largest mining company and parent of Kennecott Utah Copper, reported surging profits last year on higher metals prices. Nickel reached a record high in December on concern supply won't be enough to meet rising demand from stainless-steel producers.

"We are eagerly looking forward to getting under way with building Eagle," Kennecott Eagle Manager Jon Cherry said in the statement.

Kennecott said it hopes to begin construction in late 2007 and start mining operations in 2009. The mine is expected to produce about 250 million to 300 million pounds of nickel and 200 million pounds of copper over its life.

The Department of Environmental Quality will make a final determination on the permit after a period of public review and comment, Kennecott said.