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BATTERY MINERALS PREVIEW

Nickel’s

2020s vision

Mining at Forrestania continues to flourish
he new decade looms as a defining peri- with BHP and Chinese stainless steel pro- for Western Areas with a strong December
Tod for the West Australian nickel industry ducer Jinchuan. quarter performance
with its role in the EV revolution expected to The decision could be interpreted as
take centre stage. the abandonment of the nickel sector’s EV
Demand slumps, supply gluts and geo- dream, but Western Areas chief financial
political shocks meant the nickel price was officer Joe Belladonna told Paydirt the op- If the future of nickel sulphate demand is
buffeted around throughout the 2010s but posite was true. so bright, why then did Western Areas and
as the 2020s start the sector is set for re- “During the offtake discussions we spoke IGO drop their studies into sulphate produc-
structuring with stainless steel’s hegemony with downstream users and even OEMs di- tion? For Belladonna, it is a simple risk-ver-
on demand (currently 75%) to be disrupted rectly but the feeling was it was still a little sus-reward equation.
by the emergence of the EV market. early at this stage for them to be locking in “Strategically, it is important to keep an
The battery sector currently accounts new sources of nickel sulphate,” he said. eye on your product and where you derive
for less than 5% of nickel demand but with A lot of the OEMs are still taking product most benefit from it,” he said. “We do cap-
EV adoption gathering momentum and the in its ready-to-use form and there is avail- ture a lot of value at the mine gate so to go
new generation of EV batteries requiring ability in the market. any further downstream, you would want to
greater nickel intensity, it could pull in as “However, the groundwork is being laid see the enhanced value quite clearly.
much as 30% of nickel product by the end now. They have a longer outlook than our “The uplift in value from downstream
of the decade. current three-year offtake contracts. We processing of lithium is quite clear but in
WA nickel miners are paying heed to the believe that from 2025 you will start to see nickel it isn’t. There is currently a 15-20%
predictions. BHP Ltd reacted first, dropping demand for production tightening and users premium on the LME price for nickel sul-
the “For Sale” sign on its Nickel West divi- will be looking to secure supply.” phate but the important question for us is
sion in favour of investing heavily in new re- The plans of Western Areas’ offtake part- how long that premium can last given large
fining and smelting capacity which will see ners bear witness to the structural change groups are integrating sulphate into their
it capable of producing the nickel sulphate coming. complexes and getting better at it. Will the
product which goes directly into EV batter- “We are already aligning with that nickel premium disappear?
ies. sulphate/EV market,” Belladonna said. “So, it is important to not invest too heavi-
In the mid-tier segment, both IGO Ltd “Both BHP and Jinchuan run traditional ly on downstream capacity when there is no
and Western Areas Ltd have investigated smelting complexes but both are moving clarity on that premium for the longer term.”
the potential for adding downstream pro- towards increasing sulphate production Instead, the company is willing to allow
cessing to their traditional nickel concen- capacity rather than increasing briquettes the competitive tension in the offtake pro-
trate output. Both companies have parked for stainless steel; BHP is building a sul- cess drive improved value.
those investigations, instead locking in new, phate refinery at Kwinana while Jinchuan “It was a very competitive tender and the
traditional three-year offtake agreements is already the biggest sulphate producer in groups involved were serious about trying
for their nickel concentrate production. China and is looking to expand its sulphate to secure their supply lines,” Belladonna
IGO penned agreements with BHP and capacity and is already feeding our concen- said. “They see China as a market they can
Glencore while Western Areas signed up trate into that.” penetrate with better quality concentrate

Page 36 FeBRUaRY 2020 aUSTRaLIa’S PaYDIRT