BHP Billiton and Poseidon Nickel have arranged a contract for two years to buy nickel ore, which will be used to feed Australia’s Nickel West operations.
The markets were surprised with BHP’s statement in September when it had to leave Nickel West saying that it’s better off for an independent sale. It left the Australia C4120-783
Refinery with $15 billion extra unwanted assets and had the forecasters wondering what the refinery’s fortune would be given that it won’t likely have a new buyer showing up right away.
BHP and Poseidon have entered a conditional agreement to buy around 350,000 to 500,000 tons of nickel ore every year.
On the other hand, Nickel West has had meetings with miners of nickel to have its intake of ores lifted and it is currently trying to work on improving productivity at its downstream refining and melting arms that came after the unexpected shutting down of one if its mines because of an earthquake.
According to Gareth Jones, the Chief Financial Officer of Poseidon that whoever comes up as a buyer of Nickel West will be facing the same major issue of the concentrator not running optimally. He also added that the Leinster concentrator plan where the nickel ore of Poseidon will be transported, doesn’t process that many tons of ore according to what it’s expected to. It’s only processing more or less 600,00 tones when its capacity is actually 3 million tons.
This very low processing of nickel ore is partly blamed by experts to the loss of the Perseverance mine of BHP when it was damaged by an earthquake in November.
The contractCBAP between Poseidon and BHP will run for 24 months with a chance of being stretched for another 1-2 year and the amount or ore to buy can be increased to 100,000 more.
In the next coming days, other miners in Australia may be going up to BHP to come up with a partnership with the company.