An Australian nickel producer has increased its stake in an Indonesian nickel iron plant.
Nickel Mines announced in a statement this week that it has increased its interest in the under-construction Rotary Kiln Electric Furnace (RKEF) plant by 35% in a deal worth $70 million.
The company’s interest in the project now stands at 60%. Nickel Mines also has a 12-month call option from the date on which the first nickel pig iron is produced from the RKEF plant to increase its ownership of the RKEF plant to 100% for an additional US$120 million.
The interest acquisition is part of a wider “landmark” Collaboration and Subscription Agreement (CSA) with Shanghai Decent and a passive strategic cornerstone investor Shanghai Wanlu Investment Co. Ltd (Wanlu).
Through the collaboration, Nickel Mines will build a 2-line RKEF plant at the Indonesian Morowali Industrial Park (IMIP) for US$200M.
The IMIP has a current production capacity of 1.5 million tonnes per annum of nickel pig iron (NPI) and 600,000 tonnes per annum of high carbon ferrochrome.
Tsingshan has targeted 3 million tonnes of stainless steel per annum and so in order to meet that, NPI production requirements are expected to increase to approximately 1.95 million tonnes per annum, facilitating the requirement for additional RKEF lines within the IMIP.
It is currently anticipated that commissioning of RKEF plant will commence ahead of the contractual schedule in the June 2019 quarter.