MANILA, Philippines - Toledo Mining Corp. said it had laid off some 600 workers and contractors while some directors took pay cuts as dampened demand took its toll on nickel operations in the Philippines.

According to an industry source, the 600 workers comprise 90 percent of the company's workforce at the Berong nickel mine in Palawan.

TMC has a 56.1-percent stake in the Berong nickel project, which it shares with partners Atlas Consolidated Mining and Development Corp. and European Nickel Plc.

In an interim report covering six months to September, company chair Reginald Eccles said the management resolved "to manage the company's assets on the presumption of an extended period of poor demand and low nickel prices."

"The remaining staff in the Philippines now comprise a core team of sufficient skill mix to manage our nickel resources, to maintain the Berong mine and plant in good order and, very importantly, to convert the MOUs with Jiangxi into legally binding agreements and advance value added processing trials," Eccles said.

The Berong partners have entered into memorandums of understanding with China's Jiangxi Rare Earth and Rare Metals Tungsten Group Co. Ltd., mainly to finance and build a jointly owned nickel processing plant.

Also, Eccles said, TMC's four non-executive directors have agreed to a 20-percent reduction in fees "as a demonstration of support for these harsh but essential cost-cutting measure."

He said that the period April to September was Berong mine's best in terms of record ore production, volume sales and progress in on-site ore processing.

However, these months were also the "worst because of the precipitous decline in Chinese demand for direct shipping ore, and a near halving in the Cash LME (London Metal Exchange) nickel price."

Eccles said the price dropped to $15,750 per ton by end-September from $30,000 at the start of April.

"The price has continued to decline ... to approximately $10,000 per ton (in December)," he added.

In the period under review, Berong mine shipped 370,355 wet metric tons (WMT) of laterite nickel ore at an average grade of 1.53 percent to customers in China and Australia. It was 5 percent higher than deliveries made in the same period in 2007.

The volume of ore mined reached 547,001 WMT, while ore inventories stockpiled at the end of September amounted to 323,115 tons.

Some two-thirds of the stockpile had been earmarked for delivery to BHP Billiton's refinery in Australia under a long term supply agreement.

"The collapse in the nickel market occurred at a time when nickel inventories at Berong were being accumulated ahead of the scheduled operational shutdown from late October to end February, when offshore transshipment is impractical because of rough seas," Eccles said.