Mining giant puts smaller WA nickel players in the frame

28th February 2020
Resources Rising Stars

When the new boss of BHP identified nickel in WA as a key focus for the world’s biggest miner this week, it was music to the ears of a handful of mid-tier and smaller players involved in the space (reports The West Australian).

Presenting his first set of numbers for the mining giant on Tuesday, the polished, erudite and freshly anointed chief executive Mike Henry named nickel among a trio of commodities the company would prioritise as it transitioned to what he called a decarbonised global economy.

Nickel is set to play a growing role in the cathodes of lithium-ion batteries that power electric vehicles and are used for renewable energy storage.

It’s this fact that prompted BHP to recently bring its previously unloved and unwanted Nickel West business in from the cold.

Under the guidance of Eddy Haegel, the unit has quickly pivoted from its historic role as a provider to the steel-making sector to a supplier of high-grade nickel products to the battery supply chain.

Nickel West is well advanced with the construction of its new 100,000tpa nickel sulphate plant adjacent to its existing refinery in Kwinana, which will enable it to derive greater value from a battery-grade product.

And the division has also been busy locking in new offtake deals with mid-tier WA players in recent months, namely Western Areas and IGO.

Mincor is another player to have signed up Nickel West as a customer for when it brings its shuttered Kambalda nickel operations back online next year.

The company closed its Kambalda mines in 2016 after a sustained downturn in prices for the commodity.

But the new offtake deal with Nickel West first flagged in March last year replaces an historic agreement between the two parties and provides the catalyst for a restart of operations. Crucially the new contract is on substantially improved terms for Mincor.

Shortly after the offtake announcement, Mincor consolidated its landholding in the Kambalda nickel district in May with the acquisition of the historic Long mine from IGO.

As well as a 32,000t resource and a suite of well-maintained equipment and infrastructure, the acquisition opens up a 1km strip between the Long and Mincor’s Durkin North ore bodies that hasn’t been touched by the drill bit.

The David Southam-led company plans to develop an incline between the two historic mines and explore along the way.

Another upside for Mincor is its greenfields Cassini discovery near Widgiemooltha, which already hosts a resource of 1.25Mt at 4 per cent for 50,400t and is continuing to yield high-grade hits outside resource boundary such as the 17.6m at 5 per cent nickel reported last month.

Mincor began excavating the box cut for Cassini this week ahead of a definitive feasibility study due before the end of next month for the restart of its Kambalda mines and the development of the new discovery.

Analysts have estimated a modest capex of $60-$80 million for the restart given the historic mine development and existing infrastructure.

Tellingly, heavyweight shareholders IGO and Andrew Forrest’s Squadron Resources lifted their stakes in Mincor in a $35 million raising by the company in November.

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