June 10 (Bloomberg) -- Minara Resources Ltd., Australia's second-largest nickel producer, and gold miner Newcrest Mining Ltd. reduced output forecasts after a fire at a natural gas plant slashed supplies in Western Australia by 30 percent.

Minara cut its full-year output forecast as much as 23 percent, the Perth-based company said today in a statement. Melbourne-based Newcrest, owner of Australia's largest gold mine, said production at the Telfer operation may decline 4.8 percent. Iluka Resources Ltd., the world's biggest zircon producer, declared force majeure for some mineral sand products.

Mining companies are scrambling to find alternative sources of energy after a June 3 fire at Apache Corp.'s Varanus Island gas plant in the state's northwest halted supply for at least two months. Western Australia, almost four times the size of France, generates more than a third of Australia's exports.

``Western Australia is a microcosm of the worldwide problems affecting industries sensitive to energy price and supply issues,'' Gavin Wendt, senior resources analyst at Fat Prophets Funds Management, said in a phone interview from Sydney today. ``Companies like Newcrest and Minara, which are almost solely reliant on gas from Apache, are going to be the hardest hit.''

Minara fell as much as 13 percent before closing down 6 percent, or 23 cents, at A$3.63 in Sydney trading. Merrill Lynch & Co. cut its recommendation to ``underperform'' from ``buy'' on June 6, citing lower nickel prices and rising sulfur costs.

Newcrest closed down 2.3 percent, or 68 cents, to A$29.27 on the Australian stock exchange and Iluka fell 1.9 percent, or 7 cents, to A$3.55.

Emergency Meeting

Western Australia exported A$53.1 billion ($50 billion) of minerals and energy in 2007, including 16 percent of the world's iron-ore supply and 11 percent of its nickel.

The state government convened an emergency meeting in Perth on June 8 to discuss the crisis with about 20 companies including BHP Billiton Ltd., Rio Tinto Group and Alcoa Inc. It may take as long as four months for gas supplies to return to normal, RBC Capital Markets said June 6.

Citigroup Inc. cut Alumina Ltd.'s first-half profit estimate 13 percent, partly on the outage.

Murrin Murrin

Minara's Murrin Murrin plant is now expected to produce between 31,000 and 35,000 metric tons of nickel, the company said in the statement. That compares with a previous estimate of between 34,000 and 38,000 tons.

``Restrictions on gas availability are expected to continue for some time,'' Minara said. The company has secured temporary gas supplies, which will allow it to continue production at reduced rates, it said.

Newcrest has secured short-term supplies of gas at higher prices and also requires diesel for power. Telfer, which last year contributed about one third of the company's earnings, has only a few days of diesel supplies available, RBC analysts Geoff Breen and David Haddad said.

``Its very remote location suggests that it may be very difficult to get sufficient quantities of diesel up to Telfer within a short period to time,'' the RBC analysts said.

The interruption will affect the company's total production forecast of more than 1.8 million ounces for the 12 months ending June 30, Newcrest said in a statement today.

``The gas outage has resulted in strong competition for diesel fuel in Western Australia,'' Newcrest said. ``Supplies are limited and delivery resources are currently stretched, making security of supply uncertain.''

Iluka has stopped mining at most of its Mid West and South West operations, the Perth-based company said today in a statement to the Australian Stock Exchange. The power outage is not expected to have a ``significant impact'' on half-year profit, it said.

Iluka Loss

Force majeure is a legal clause that allows a company to miss deliveries because of circumstances beyond its control. Zircon is principally used in ceramic glazes, refractories and electron absorbers in nuclear reactors.

Iluka will have a loss this financial year, partly because of the affect of the shortages, Citigroup said in the report. Alumina, partner with Alcoa Inc. in the world's biggest producer of the material used to make aluminum, may have full-year profit of A$410 million, down 11 percent, the broker said.

BP Plc, the only crude-oil refiner in Western Australia, is boosting diesel imports to meet the increase in demand.

``We're definitely importing; we've already arranged some imports,'' Chandran Vigneswaran, a spokesman for BP's Australian unit, said by telephone today. He declined to give details until the company has secured the cargoes it needs.

Babcock & Brown Power, Australia's biggest publicly traded power producer, expects a ``short-term'' reduction in earnings at its Alinta retail unit in Western Australia.

Alinta Earnings

Alinta's earnings are not expected to be affected once normal supplies resume, Sydney-based Babcock Power, or BBP, said today in a statement to the Australian stock exchange. The company halted its shares in Sydney.

Burrup Holdings Ltd., an Australian-based producer of ammonia, shut down its plant in Western Australia due to the gas shortage. The company has accelerated its 20-day planned maintenance shutdown proposed for July, Perth-based Burrup said in an e-mailed statement. The company was studying the affect of the shortage on its proposed initial public offering.

Burrup, which forecasts full-year 2009 ammonia production of more than 800,000 tons, in May said it plans to raise as much as A$502 million in a share sale.

Perth hotels will struggle to accommodate 1,800 tourist operators when it hosts this week's Australian Tourism Exchange convention after the gas shortage closed the industry's biggest laundry service, the West Australian said today.

Prime Laundry, which services 85 percent of Perth's hospitality industry, closed its operations last week. Alinta has said residential gas users won't be affected.

To contact the reporter on this story: Jason Scott in Perth at Jscott14@bloomberg.netJesse Riseborough in Melbourne at jriseborough@bloomberg.net

Last Updated: June 10, 2008 05:09 EDT