https://www.copyright link/companies/mining/japan-inc-backing-for-nickel-mine-puts-bhp-bailout-in-doubt-20240429-p5fndwJapan Inc will back the development of one of the world’s biggest nickel deposits in Western Australia in a move that casts further doubt on whether the Albanese government will bail out BHP and its struggling operations.Sumitomo and Mitsubishi have agreed to back Ardea Resources and its $3.1 billion nickel laterite and cobalt project, about 80 kilometres from Kalgoorlie and BHP’s ageing nickel smelter.Wyloo boss Luca Giacovazzi and Ardea Resources boss Andrew Penkethman at a nickel crisis meeting in January.Ardea’s Goongarrie project is slated to produce 30,000 tonnes of nickel and 2000 tonnes of cobalt per annum over a 40-plus-year mine life using the latest iteration of the high pressure acid leach (HPAL) technology that has helped Chinese-backed miners in Indonesia flood the global market with cheap nickel.BHP mines nickel sulphide in WA and runs it through concentrators, the Kalgoorlie smelter and a refinery in Kwinana, south of Perth, as part of its supply chain.With BHP now pursuing one of the biggest takeover deals in its history of Anglo American to boost copper, coal and iron ore production, its plans for a WA nickel business that lost $US200 million in the six months to February remain unclear.
It is understood the government remains undecided about what help, if any, to offer BHP and other struggling nickel miners in the federal budget, including Andrew and Nicola Forrest-owned Wyloo.Resources
Minister Madeleine King said the Ardea deal showed how Australian nickel projects could succeed economically.Ardea, Sumitomo and Mitsubishi will form a partnership to develop Goongarrie, sharing the cost of feasibility study up to $98.5 million. The Japanese partners will help secure debt funding on favourable terms and emerge with a 50 per cent stake alongside Ardea if the project goes ahead.
Sumitomo, which would own 40 per cent of the combined entity alongside Mitsubishi’s 10 per cent, has experience in developing nickel laterite mines and HPAL processing plants through two big operations in the Philippines – Coral Bay and Taganito – and owns nickel refineries in Japan.Ardea chief executive Andrew Penkethman said he expected a trend toward nickel laterite production in Australia regardless of what happened with the BHP operations.“The [HPAL] technology is de-risked and it is very cost-competitive.
We will continue to have some sulphide production but, as we all know, sulphide deposits are getting harder to locate and a lot of them are deeper and deeper under the ground and that makes them more expensive to mine,” he said.Mr Penkethman said a big problem for BHP was the age of its nickel operations and associated technology.Ardea and its Japanese partners intend to build an HPAL plant generations ahead of the one at Glencore’s Murrin Murrin laterite mine in WA that remained profitable even as nickel prices plunged last year.
“Part of the challenge for BHP is that it’s all old technologies,” Mr Penkethman said. “Nickel West has been around for decades, but when it was developed lithium ion batteries weren’t known about, so presumably a lot of their work is retrofitting whereas we’ll be developing a brand new, fit-for-purpose project.”In March, BHP cut contractors working on the Kalgoorlie smelter and deferred plans for a 1000-bed camp to house workers needed to rebuild the 51-year-old infrastructure.
BHP is weighing up whether to mothball its entire nickel mining, refining and smelting division in WA, in a year when BHP was scheduled to commit close to $1 billion in new spending to refurbish the smelter.A slight rebound in nickel prices – the spot price is just below $US19,000 a tonne on the London Metals Exchange – and the prospect of government funding for the smelter refit or a production tax credit will play into a BHP call that affects thousands of workers.
Mr Penkethman said Ardea expected to be cost-competitive with Indonesian producers which BHP, Dr Forrest, the government and others have suggested are flooding the market with “dirty nickel” produced under low environmental, social and governance (ESG) standards.Sumitomo Metal Mining executive Masaru Takebayashi said Goongarrie was a major critical minerals project and would be advanced in a way that “meets the high ESG standards expected from modern society”.Australia’s nickel sulphide miners have pushed for a so-called green premium on their product based partly on it having a lower carbon footprint.Mr Penkethman said based on studies last year Ardea expected to generate 11.9 kilograms of CO2 per kilogram of nickel it produced.
“That’s on par with BHP emissions and they market themselves as one of the most sustainable nickel producers in the world,” he said.“And if we look at the CO2 intensity being generated by some of the nickel producers in Indonesia, it can be as high as 60 to 90 kilograms [per kilogram of nickel].”
Ms King said the partnership was a great example of collaboration between Australia and Japan in mining.“This is a globally significant nickel-cobalt project that shows how Australian nickel projects can succeed economically, while also meeting the world’s best ESG standards,” she said.
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