Offtakers calling from all markets
It’s a good time forWestern Areas (ASX:WSA)to be shopping offtake from its new Odysseus mine, which is due to open in December 2022 and where the WA nickel miner struck first ore yesterday.
Traditionally interest has only come from BHP and nickel smelters in Asia. Now the customer base for nickel is blowing wide open as EV and battery makers step into the market.
“So with the Odysseus offtake we’ve got a short-term two-year (deal), which only commences funnily in a year’s time, and we’ve been blown off our feet by the response so far,” Western Areas managing director Dan Lougher told delegates at the Australian Nickel Conference.
“…As we’ve just heard, things are looking very good up in Asia, Europe is coming into the market and so is North America. So everybody wants a piece of the pie.
“And as you’ve heard even yesterday, a new MoU between Toyota, Panasonic and BHP and we only just recently heard about the Tesla deal as well.
“So things are changing. I actually put down there that Korea was moving faster than Japan, but maybe I’ll have to rewrite my presentation.”
Lougher said nickel miners will be moving away from the traditional short-term smelter deals underpinned by stainless steel demand towards long-term, life of mine contracts that provide security of supply for customers and funding certainty for miners.
“We think that the new trend will be that contracts will move away from your typical smelter contracts and more into life of mine contracts, which is difficult for people like us, because we are very, very driven by short-term smelter contracts,” he said.
“But I think that the demand going forward, we will see some new factories being built. And that will then flow back into the miners, not just Western areas.”
IGO looking for new sources of nickel
It is no secret that IGO, which also owns a quarter-share of the Greenbushes lithium mine, is ensconced in due diligence on Western Areas.
The deal will solve a significant problem for IGO. Its Nova nickel mine is a great, low cost operation,but it is short on mine life.
Western Areas on the other hand has life yet at Spotted Quoll and Flying Fox mines at the Forrestania operations, a potential new mine at that complex known as New Morning, and the decade-plus Odysseus mine at its Cosmos nickel complex in the northern Goldfields still to come online.
It also has a scoping study on the way at Mt Goode, a large, low-grade underground and open pit mine reminiscent of the type of ore extracted by BHP at its nearby Mt Keith operations.
“It’s over 300,000 tons of nickel,” Lougher said. “And we say yeah, ‘0.6%, what the hell Dan?’ Well, with the right open pit mining methods, the hydrometallurgical probably processing route, this is actually going to come up.
“And we are pushing this now quite hard, especially in terms of talking to some key strategics (investors).
“This will push nickel at Cosmas over 20 years, well into 2040.”
