FOLLOWING Western Areas’ competitive offtake tender process, Jinchuan Group was successful in re-securing the tendered nickel concentrate sales contract for the company’s Forrestania nickel operations in Western Australia. The contract term is for two years or the delivery of 26,000 tonnes of nickel contained in concentrate effective from December 2014, whichever is the earlier.
Whilst the commercial terms of the new contract are confidential, the company can confirm that nickel concentrate will be sold on a free on board (FOB) basis from Esperance Port utilizing sealed shipping containers, consistent with the existing contract. The nickel payability terms remain very favourable to Western Areas at the top end of today’s nickel concentrate market and reflect the premium characteristics of the nickel concentrate produced at Forrestania.
Western Areas’ managing director Dan Lougher expressed his pleasure in continuing the strong relationship formed with Jinchuan. “Jinchuan and Western Areas have had a close relationship for more than five years and we are delighted this will continue for two years. In our experience, Jinchuan has demonstrated without question to be a quality customer, and as China’s largest nickel producer, this is a very important strategic relationship for Western Areas to have. The tender process involved many new participants and was incredibly competitive against the backdrop of the Indonesian Export Ban and significant potential structural change to the nickel industry in Western Australia.”
Western Areas also annually sells 12,000 tonnes of nickel in concentrate to BHP Billiton’s Nickel West business which is expected to conclude in early 2017.
Western Areas is Australia’s class-leading nickel producer, with high grade nickel production assets in Australia and base metals development projects across Australia, Canada and Finland. Production is built around two of the world’s highest grade underground nickel mines, Flying Fox and Spotted Quoll. The high grade nature of the two mines coupled with a consistent track record of meeting production targets produces significant operating margins.
Western Areas was built upon the discovery of two high grade nickel ore bodies at Forrestania and this forms a natural part of the company’s continuing growth strategy. A significant re-investment in exploration at Forrestania is led by the proven team responsible for discovering the Flying Fox and Spotted Quoll deposits. The company believes significant further discovery potential exists and success in this program will naturally leverage existing installed production infrastructure.
Based on 10-year production targets Forrestania is expected to annually produce an average of 25,000 tonnes of nickel in concentrate.