|Nickel: Procurement race heats up as LG Chem signs offtake with Australian Mines |
Posted 19th August 2021 in ?Industry news.
By Jack Anderson
LG Chem, through its subsidiary LG Energy Solution (LGES), has announced it has entered into a deal with Australian Mines for mixed nickel-cobalt hydroxide from its Sconi project. As part of the deal, LGES will purchase 71kt Ni and 7kt Co in the form of mixed hydroxide product (MHP) from Australian Mines for a six-year period, starting from the end of 2024. The company expects the offtake quantities covered by the offtake agreement to represent 100% of the projected future production of Sconi. As part of the arrangement, Australian Mines must secure financing for the construction of the Sconi project on or before 30 June 2022.
The Sconi project is being developed in Greenvale, Queensland, Australia and is wholly owned by Australian Mines. In June 2019, as part of an update to the 2018 bankable feasibility study (BFS) for the Sconi project, Australian Mines explored the possibility of producing over 1.4Mt of nickel sulphate over a 30-year operation. More recently, the company had also been assessing the potential for adding further value by producing a nickel-cobalt-manganese precursor cathode active material (PCAM) owing to demand from a number of prospective offtakers.
The offtake agreement for MHP that the company now has in place with LGES, however, means that original plans to produce more downstream products such as nickel sulphate or PCAM no longer seem necessary. Given the high demand for battery-grade nickel and cobalt intermediates from third-party producers of nickel sulphate in Asia, there is greater requirement for a focus on products like MHP and MSP. Despite these products having lower added-value, producing an MHP would simplify the operation, lowering costs, and avoid the stringent quality assurance process required to market a nickel sulphate product. This development could pave the way for similar moves by other prospective Australian nickel producers that have been plagued by high-costs associated with designing fully integrated nickel sulphate projects.
For LGES, the deal with Australian Mines represents its second recent business in Australia. In June 2021, LGES made an investment in and secured an offtake agreement with Queensland Pacific Metals (QPM), another prospective Australian producer of battery-grade nickel and cobalt products, from its Townsville Energy Chemicals Hub (TECH) project also in Queensland.
Nickel and cobalt are critical raw materials for the clean energy transition. Roskill forecasts the demand for nickel and cobalt chemicals will grow by over 500% and 100%, respectively, between 2021 and 2030. Such rapid growth will be largely underpinned by the uptake of electric vehicles (EVs) and increased adoption of nickel and cobalt in EV battery cathodes.
The Australian nickel industry has seen a flurry of business deals so far in 2021. One of LG Chem’s customers, Tesla, recently announced that it had secured a long-term offtake agreement for nickel from BHP Nickel West’s operation. Seemingly eager to source nickel that is unlikely to attract similar ESG supply chain scrutiny compared to Southeast Asian material, these companies are increasingly locking in supply from alternative sources, including Australia. The race to secure battery-grade nickel units is intensifying.
Roskill published its Nickel: Outlook to 2030 and Nickel Sulphate: Outlook to 2030 reports in April. The reports highlight the latest developments to supply and demand as well as forecasts for stainless steel and battery markets. Roskill’s array of Nickel offerings also include Roskill’s Nickel Sulphate Cost Model Service and Nickel Sulphate Sustainability Monitor.
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