Western Areas has reported increasing customer demand from the likes of the world’s largest stainless steel company, Tsingshan Group.
Tsingshan, its key offtake customer, is planning to substantially increase its high-nickel-content stainless steel capacity over the next few years. In 2017, Tsingshan produced 7.48Mt of stainless steel.
Western Areas managing director Dan Lougher said that new development would be expected around its existing offtake agreements with Tsingshan Group and BHPB Nickel West. Both agreements are reaching their end of term in 2019.
While stainless steel remains the main nickel demand driver, Western Areas said enquiries from new customers for high quality nickel concentrate were increasing.
The EV battery industry is shifting its preference to higher nickel content batteries, and nickel sulphides have become the preferred source to supply nickel sulphate for these batteries.
Having commissioned its mill recovery enhancement project (MREP), the project will ramp up to produce a new high-grade nickel sulphide product.
Further, Western Areas’ definitive feasibility study for its Odysseus project is nearing completion. The study will be completed and released in late September this year. Western Areas anticipates a larger and longer mine life beyond 10 years.
Early works at Odysseus were launched earlier this year and fully funded by the company. Once complete, Odysseus will become Western Areas’ third operating mine and second production centre.
Western Areas managing director Dan Lougher said, “Whilst our balance sheet is in a strong position to facilitate funding organic growth initiatives, we remain disciplined in our capital management.”
The company reported a sales revenue of $248.3 million during the 2018 financial year. This figure is underpinned by an EBITDA of $84 million and a 40 per cent improvement in EBITDA margin to to 33.8 per cent. Its operating cashflow has increased to $77 million.