Page 18 - pd292-Apr21-mag-web

neWs

Stainless steel behemoth

crashes nickel car dreams

singshan Holding Group Co. has remind-
Ted the nickel world of its might after an-
nouncing potential diversification into the EV
battery supply chain.
Tsingshan – the world’s biggest stainless
steel producer – has emerged as a diversi-
fied nickel player after unveiling its strategy to
process nickel pig ion (NPI) into nickel matte
suited to the compilation EV batteries.
Tsingshan had been trialling production of
high-grade nickel matte since July in rotary
kiln electric furnace (RKEF) facilities within
the Indonesia Morowali Industrial Park (IMIP).
Upon successful trial completion, a one-
year deal to supply 60,000t of nickel matte
to Huayou Cobalt and 40,000t to CNGR Ad-
vanced Material Co. Ltd was agreed to start
in October, giving Tsingshan exposure to the
EV battery sector.
News that a significant party had technol-
ogy to process NPI into battery-nickel saw
LME nickel prices plummet almost 10% in a Justin Werner
single day, while nickel equities also felt the
brunt of the new entrant to a sector under RKEF nickel projects in IMIP. by stainless steel makers, which was where
pressure to fulfill growing demand for EV- The company will also attain an 80% in- Nickel Mines’ NPI went.
related batteries. terest in the Angel nickel project (IMIP) after However, Tsingshan’s developments in In-
“The emergence of technology that can agreeing to pay $US560 million for its stake. donesia have expanded Nickel Mines’ scope
process nickel pig iron into battery nickel Angel is currently under construction and of opportunity.
could alleviate the tightness in the non-stain- comprises four RKEF lines with nameplate “It means that we can become a diversified
less steel sector and take the wind out of the capacity of 36,000 tpa. nickel miner and we are not just a producer
sails of the nickel price rally. However, we “When Angel nickel comes on-line that will of Class 2 nickel anymore. We can potentially
don’t expect that to be a major hindrance to effectively double our nickel production [from produce Class 1 nickel as well and there is
further upside in prices over the long-term,” 2022] to in excess of 50,000 tpa [nickel metal currently no-one out there in the listed nickel
ANZ Research stated in a note on March 11. equivalent contained in NPI] and that puts us space that is able to do that,” Werner said.
At the time of print, the LME nickel price right up there as a top 10 global nickel pro- Nickel Mines, and its collaboration partner
was $US16,158/t, well below the 2021 high of ducer,” Werner said. Shanghai Decent, now have the potential
$US19,689/t reached in February. Nickel Mines has risen from small-scale optionality to direct the nickel units produced
“It is a wake-up call to industry about the nickel laterite supplier when it emerged via at the Hengjaya and Ranger nickel projects
size of Tsingshan and their innovation and IPO on the ASX in 2018 to 35,000 tpa nickel into NPI and nickel matte, subject to market
ability to move quickly. Again, it brought back producer, with a strategic Tsingshan partner- conditions.
the focus of what Tsingshan aims to do and it ship in place. “Market demand and prices will enable
is all about cost. They have been the largest Tsingshan producing nickel matte follows these businesses to capitalise on any tem-
and lowest-cost nickel producer and I think PT Vale Indonesia’s well-established RKEF porary or prolonged disconnections in price
people were perhaps getting a bit carried facilities, albeit using a slightly different pro- between NPI, LME nickel and nickel sulphate,
away with where the LME nickel price was,” cess. thus ensuring an optimised margin outcome
Nickel Mines Ltd managing director Justin “Switching between NPI and nickel matte across the company’s operations,” the com-
Werner told Paydirt. production creates the ability to be a swing pany stated.
“I think this brought everyone back to earth producer and move between different prod- At the time of print, proposed offering of
and back to reality. If you are going to try and ucts to capitalise on where there may be a $US300 million senior secured notes, togeth-
compete with Tsingshan or Nickel Mines then price premium,” Werner said. er with cash on hand, will help Nickel Mines
you need to be in that first quartile, right down “That obviously had an impact on the mar- fund the $US350 million second stage acqui-
the bottom end of the cost curve.” ket given where it was and the expected de- sition of an additional 50% equity interest in
Tsingshan’s ability to produce nickel matte mand and shortages that people were seeing the Angel nickel project was announced. As
within the IMIP serves companies like Nickel in the nickel sulphate market. I think Tsing- the second stage acquisition of Angel does
Mines a great deal. shan’s announcement to increase nickel pro- not have to be completed until December 31,
Nickel Mines’ $3.5 billion market cap on the duction to 1.1 mtpa in a market that is only 2.5 if acceptable terms and market conditions
ASX has been built on its 80% stake in the op- mtpa obviously had an impact as well.” don’t prevail, the directors will decide whether
erating Hengjaya nickel mine in Morowali and Werner said it was important to remem- the notes are issued.
80% interests in the Hengjaya and Ranger ber that 70% of nickel was still demanded – Mark Andrews

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