Nickel Mines increases pig iron plant interest to 60% for $US70m

According to Mining News Pro - Australian company Nickel Mines has increased its interest in an under-construction nickel pig iron plant in Indonesia by 35 per cent to 60 per cent for $US70 million ($97.3 million).

The Rotary Kiln Electric Furnace (RKEF) plant, located in Indonesia’s Morowali Industrial Park (IMIP), is used for the production of nickel pig iron — a key component of stainless steel. The plant is located 12km from the Hengjaya Mineraldo nickel mine, in which Nickel Mines holds an 80 per cent interest.

Hengjaya Mineraldo hosts a JORC 2012 resource of 37.5Mt at 1.81 per cent nickel for 680,000t of contained nickel metal.

Nickel Mines has a strategic partnership with Chinese company Tsingshan, the world’s largest stainless steel producer, and Hengjaya Mineraldo provides nickel pig iron as feedstock for Tsingshan subsidiary Shanghai Decent’s 3Mt/y stainless steel facility.

Nickel Mines and Shanghai Decent signed a $US200 million collaboration and subscription agreement in September last year for the construction of the RKEF plant.

Nickel Mines will pay $US70 million for the shares in Hengjaya Holdings (the Singaporean holding company that owns the RKEF plant), with a 12-month call option to increase its ownership in the RKEF plant to 100 per cent for a further $US120 million, valid from the date on which the first nickel pig iron is produced from the plant.

Commissioning of the RKEF plant is expected to commence ahead of schedule in the June 2019 quarter.

Nickel Mines was listed on the ASX last month after raising $200 million in a large IPO.