"Low-grade disseminated sulphide ore is mined from Mt Keith, a large open-pit operation and high-grade nickel sulphide ore is mined at Cliffs and Leinster underground mines. The ore is processed through two large concentrators and dryers at Mt Keith and Leinster. Nickel West’s concentrator plant in Kambalda processes ore and concentrate purchased from third parties [IGO WSA MCR]
The three streams of nickel concentrate come together at the Nickel West Kalgoorlie smelter, a vital part of our integrated business. The smelter uses a flash furnace to smelt concentrate to produce nickel matte. Nickel West Kwinana then refines granulated nickel matte from the Kalgoorlie smelter into premium-grade nickel powder and briquettes containing 99.8 per cent nickel. Nickel metal is exported to overseas markets via the Port of Fremantle"
In the Tesla offtake article BHP confirmed 2 weeks ago that they would be looking for "acquisitions" in the WA Ni industry & "JV deals with juniors".
Next they made a surprise overseas t/o bid for Noront.TSX in Canada knowing full well AF held 37% of the low grade, no mine, no mill explorer. This would have infuriated AF who wrongly thought he & his team were on a massive capex $1B 3 year term controlling stake winner there.
On my maths BHP do NOT have the offtake to fulfill this contractual deal with Tesla at the moment & Noront will NOT full this either anyway as its not in WA & will take $1B expenses and 3 years to build.
So where will BHP get this extra 40kTpa of Ni concentrate from in WA?
BHP only has 5 serious options near term (6-12 months):-
- get rid of Jinchuan from WSA offtake of 50% (the 50% it doesnt already obtain) - EASY, only 6ktpa extra
- get rid of Trafigura from IGO offtake of 50% (the 50% it doesnt already obtain) - HARDER, 15ktpa extra
- take POS offtake 100% at large production using Kalgoorlie smelter & Kwinana refinery, AF in the way
- get PAN to dump Trafigura contract deal - IMPOSSIBLE, $45M already paid, lawyers in the way
- ramp up its own mines and mills at Mt Keith, Cliffs Lienster, Kambalda (near W), taking years & $1B capex
Other juniors like ESR DKM etc have potential new lower grade mines & may take 2-3 years to discover/JORC & cost $500M capex to build to production.
Even if they get rid of WSA IGO offtakers, thats still only 21kTpa on current production figures & to make them ramp up production or find higher grades would take 2-3 years and another $500M capex imho.
As BHP has pushed AF aside like a schoolboy in Noront despite his 37% stake whats stopping them doing the same to Trafigura in IGO or Jinchuan in WSA or AF/BMM/MD in Poseidon?
The Tesla deal was a warning shot to all WA Ni producers/miners,
Noront was a warning shot in AFs face & to WA producers/juniors.
Either way I look at this it seems obvious to me more and more -
BHP, the monopolist, is desperate for Poseidon low impurity high & low grade Ni concentrate urgently and immediately. They could easily bid to takeover Poseidon using their $58Bpa revenue power if AF/BMM /MD do not stop them.
PH the CEO already told us back in October, BHP would love our ore.
If Poseidon moves to restart BS monster mill production & sides with AF/FMG/Trafigura & cuts out BHP totally from its offtake, BHP will be mightily peeved like AF is right now over Noront.
This may inspire BHP to take action sooner rather than later, a small $500M could start it up.
Bully boy BHP aka Godzilla is eyeing us up & running the ruler, I HAVE NO DOUBT.
AFs actions have been puzzling & inconsistent but I think even he should realise his errors here.
AF must take action now or lose Poseidon forever.
He should make the shares too expensive, increase his stake substantially & make a proposal to the BOD as to funding via CN or debt. If PH gifts LJ to BMM & the BS offtake to BHP dirt cheap then its over.
AF is our main & only hope in blocking any BHP interest in Poseidon, only then can -
Poseidon become the 2nd Force in Nickel Production
(20min delay)