Western Areas has awarded offtake contracts to BHP Nickel West and Jinchuan for its high-grade Forrestania nickel concentrate product.
This follows the completion of a highly competitive tender process that has resulted in improved commercial terms compared with current offtake agreements.
The Nickel West contract is also a new agreement and not an extension of a previous arrangement.
Nickel West’s previous contract with Western Areas is due to complete on January 31, while the new contract starts from February for a period of three years, or until the completion of an aggregate quantity of 10,000 tonnes of nickel in concentrate a year with a 30,000-tonne aggregate limit.
The Jinchuan contract period will also start in February and run for two years, with the potential to extend for a further 12 months by mutual agreement.
It will also deliver a quantity of 10,000 tonnes of nickel contained in concentrate a year, with a 20,000 tonne aggregate limit.
This will pick up from Western Areas’ existing contract with Tsingshan, which will end on January 31.
Western Areas managing director Dan Lougher said the company was pleased with the new agreements, extending its 10-year working relationship with Nickel West and reintroducing Jinchuan as an offtake customer.
“It is notable that both of our offtake customers are involved in the downstream operation of nickel smelters,” Lougher said.
“Western Areas firmly believes that the smelting of concentrates is a key process to continue to feed both the emerging electric vehicle battery market, via nickel sulphate and the traditional stainless steel market.”
Lougher also noted Jinchuan’s position as China’s largest nickel matte and cathode producer.
He believes that aligning Western Areas with a large China-based producer is strategically important as the market for higher value products continues to grow.