Nickel demand

Looks like the demand for nickel will continue to be strong in WA - SEG are in the box seat if they can tap one of their 16 "eyes"

"THE executives in charge of BHP Billiton’s proposed spin-off will need to chase new sources of nickel supply as a high priority.
BHP’s Nickel West business has been the subject of a sales process in recent months, but the company yesterday signalled it was instead likely to package non-core operations into a demerged business.
Improving the economics of the Nickel West smelter near Kambalda in Western Australia’s eastern goldfields will require the new company to shore up new supplies of nickel feed from around the region. The early closure of BHP’s Perseverance underground nickel mine last year due to ground instability has upped the smelter’s reliance on third parties.
Western Areas has previously said it has put out to tender a contract for the supply of 13,000 tonnes a year of concentrate from its high-grade Forrestania nickel project. But the spin-off will face stiff competition for that offtake, with about 25 parties from across the world having expressed interest.
Output from Sirius Resources’ Nova discovery is due to hit the market in 2016 and managing director Mark Bennett has said he would be happy to send concentrate north to Kambalda or south to Esperance for export.
For the various Western Australian nickel producers already supplying the smelter, it was business as usual on the back of yesterday’s news.
Western Areas executive director David Southam said he did not believe there would be any impact on the company’s agreements from either a demerger or outright sale. “Under either outcome it doesn’t really impact us. Our contracts with BHP survive any sale or transfer,” Mr Southam said.
Minor Resources supplies ore from its Kambalda nickel mines into the smelter, and Mincor managing director David Moore said his company had always enjoyed a good relationship with BHP.
He noted additional sources of supply would only help improve the smelter’s economics. “We all know the key to smelting is volumes. In the long term I’d imagine their main concern will be feedstock,” he said.
Assuming Nickel West finds its way into the new vehicle, the assets will move from the fringe of the BHP behemoth towards the core of the new company’s portfolio. For that reason there will be some relief the new ownership structure might see more reinvestment into the smelter. The fat margins on offer from investing in BHP’s super profitable iron ore business has made it difficult for other divisions such as nickel to attract capital.
While earnings of the nickel arm fell sharply in recent years, they have been a major money spinner in the past. A fortunate uptick in prices meant the assets effectively paid for the WMC acquisition, netting BHP the Olympic Dam mine essentially for free.


http://www.theaustralian.com.au/bus...-for-nickel-west/story-e6frg8zx-1227026084682