Western Areas locks in agreement with leading Chinese steel producer

Nickel miner Western Areas has secured an off-take agreement with Tsingshan Group, one of China’s largest producers of stainless steel.

According to Western Areas, Tsingshan, through subsidiary Golden Harbour International, will import raw materials from the WA-based company for the production of stainless steel from February 2017.

The three-year contract will involve the annual supply of 10,000 tonnes of nickel contained in concentrate.

Western Areas managing director Dan Lougher said the Tsingshan agreement was many years in the making and followed the Chinese company’s desire to capture as much value as possible from the nickel it provides.

“Over three years ago, Western Areas recognised Tsingshan as an innovator in the production of stainless steel and since then we have developed a close working relationship through the sharing of technical knowledge and many site visits,” Lougher said in a statement.

“Tsingshan is clearly leading the charge in China to produce a greater proportion of the higher quality 300 series stainless steel product, which contains up to four times the amount of nickel than 200 series stainless.

“With this in mind, it has been a specific Western Areas strategy to innovatively position itself in the stainless steel supply chain, with the ultimate objective of delivering a stronger bottom line to our shareholders through investigating non-traditional markets and thereby capturing a greater share of the value of the nickel we produce.”

Together with Tsingshan, Lougher said Western Areas was capturing additional value as the Chinese company intends to utilise a proven and highly-integrated process to produce stainless steel.

The process will incorporate roasting the nickel concentrate, which has significant productivity benefits over the conventional smelting and refining processes, he added.

“As Tsingshan is China’s largest consumer of nickel and producer of ferro-nickel, it makes clear strategic sense to take the advantage of linking our company directly with the end user,” Lougher concluded.

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