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LONDON (Dow Jones)--Australian nickel miner Albidon Ltd.'s majority owner, China's state-owned miner Jinchuan Group Co., plans to make Albidon an acquisition vehicle for nickel assets, Albidon's managing director said in an interview.

Jinchuan built a 50.4% stake in Albidon during the financial crisis when low nickel prices and tighter credit markets forced Albidon to suspend development of its Munali nickel project in Zambia, delist from exchanges, and move into administration.

Albidon's now on track to relist on the Australian Stock Exchange in August and reach its annualized capacity of 6,500 metric tons of nickel in concentrate at Munali by September, Alasdair Cooke told Dow Jones Newswires.

Once this is achieved, Albidon plans to use Jinchuan's strong connections with Chinese banks to move quickly and aggressively in acquiring nickel assets in Africa and Australasia that have synergies with Jinchuan, Cooke said. Jinchuan is China's biggest nickel producer, with an annual capacity of 150,000 tons.

"The general intention in Jinchuan is seeking to use Albidon as a vehicle for their offshore activities," Cooke said. "Albidon's maintaining a close watch over any opportunities in African and Australasian regions for nickel assets," he said, adding Albidon's team will "go and find these distressed projects and bring them under the same management."

Cooke said some potential targets are projects owned by companies that Jinchuan has already signed offtake agreements with, or has stakes in.

Jinchuan has offtake agreements with Avebury nickel mine, owned by a subsidiary of Minmetals Resources Ltd.'s (1208.HK), and Asian Mineral Resources Ltd.'s (ASN.V) Ban Phuc Nickel mine in Vietnam. Both mines were idled during the financial crisis when nickel prices fell sharply and have yet to be restarted.

Cooke said Albidon has not reached the stage in any of its relations or discussions with companies to reach an agreement or make an announcement. "(There is) nothing that can be formalized at the moment."

One difficulty Albidon faces is the scarcity of nickel sulfide deposits that are in the predevelopment stages. Nickel sulfide deposits are rarer but more attractive than nickel laterite because the extraction technology is well-understood and costs are generally lower.

The biggest nickel sulfide prospect in Albidon's view is Xstrata PLC (XTA.LN) and Barrick Gold Corp.'s (ABX) joint venture Kabanga nickel sulfide deposit in Tanzania. The two companies are nearing the end of a feasibility study for Kabanga. Barrick chief executive Aaron Regent at a conference last November cited Kabanga as one of its non-core projects that it could sell, said Barrick spokesman Vince Borg. The company has said it plans to make a decision once the feasibility study is completed.

"There's no question Kabanga is the best undeveloped nickel deposit in the world," said Cooke. "The project isn't formally on the market but I think everyone knows Barrick's canvassing interest."

Xstrata is the operator in the joint venture. An Xstrata spokesman said the mine could produce more than 40,000 tons a year for at least 25 years.

Xstrata has the first right of refusal for Barrick's stake if it sells, and the joint venture shareholders agreement also includes an offtake agreement, said Borg.

Albidon may be too small to handle a mine of this size, though it could be within Jinchuan's range, Cooke said, adding he couldn't speak for Jinchuan. "Albidon's got to focus on things that are within its capacity. With a team learning to run a 7,000-ton underground project, [we] need to look at something the same size," he said.

Jinchuan would be capable of building and operating a project of that size on its own, possibly with the expertise of Albidon, Cooke said. "I see [Kabanga] as a big company project."

-By Matthew Walls, Dow Jones Newswires; +44 (0)20 7842 9412; [email protected]