Possible buyers for BHP Billiton’s Nickel West business are scrutinising the sector’s junior miners as they weigh up the potential for long-term supply for one of its key assets, the Kalgoorlie smelter.
The sale of the Nickel West business has been under way for some months and industry sources suggest interested buyers have been narrowed down to resources giants Glencore and Jinchuan Group.
Any buyer of the West Australian assets would have to work with local nickel producers to secure supply for the smelter, which has run about 10 per cent under capacity and at a high cost for BHP, with industry suggesting that either a secure offtake agreement or an acquisition of a local player is highly likely.
Fingers appear to be pointing towards both Western Areas and Sirius Resources due to the quality of their nickel concentrate and their relative freedom to sign a deal.
Western Areas managing director Dan Lougher confirmed that the company had been in talks with prospective buyers, including Glencore and Jinchuan, but had not yet been approached in regards to an acquisition.
“Our job is to be across who is in the room talking to BHP because it may be very significant to us and we should be, and are, having conversations with those parties,” Mr Lougher said.
Western Areas has two offtake agreements in place; a 12,000-tonne-a-year commitment to sell concentrate to Nickel West until 2017 and a rolling two-year deal with China’s Jinchuan Group to ship 13,000 tonnes of concentrate.
Mr Lougher said the company had been discussing the renewal and terms of those agreements with both incumbent and new parties and was “playing a bit of politics” to leverage those contracts.
Assets under the Nickel West banner include the Mount Keith, Cliffs, and Leinster mines and concentrators, as well as the Kalgoorlie smelter, the Kambalda concentrator, and the Kwinana oil refinery.
There has been speculation that juniors in the region would form a consortium to buy an individual asset but Mr Lougher said this was unlikely.
On Thursday Poseidon Nickel announced an offtake agreement with Nickel West for the delivery of ore from its Windarra project to the Leinster concentrator.
For the rest of this article, click here: http://www.smh.com.au/business/supply-a-critical-issue-for-suitors-of-nickel-west-20141002-10pcoz.html