Australia’s Nickel Mines has signed an agreement with Shanghai Decent Investment (Group) to buy a 70% stake in the Oracle Nickel project in Indonesia in a deal worth $525m.

Oracle Nickel is a development project consisting of four rotary kiln electric furnace (RKEF) lines and has started construction within the Indonesia Morowali industrial Park (IMIP) in Central Sulawesi, Indonesia.

The four RKEF lines will have an annual nameplate production capacity of 36,000 tonnes of equivalent contained nickel in nickel pig iron.

The Oracle Nickel project will also include ancillary facilities needed to operate the RKEF lines.

To support the RKEF lines and the IMIP’s grid power requirements, Nickel Mines is expected to install a 380MW captive power plant.

Commissioning of the four RKEF lines is expected to begin no later than 19 February 2023, while the power plant will come online on or before 19 July 2023.

Under the terms of the agreement, Nickel Mines will pay $371m to Shanghai Decent and will have to provide a funding of $154m for the construction of the project.

Oracle Nickel managing director Justin Werner said: “Once again we are extremely pleased to have quickly converted a project acquistion MoU into a binding Agreement with Shanghai Decent.

“This transaction not only further cements our strategic partnership with Tsingshan but importantly continues to position Nickel Mines as a gloablly significant nickel producer.

“With our commitment to the Oracle Nickel Project coming rapidly on the heels of the fasttracked commissioning of our 80% owned Angel Nickel Project, Nickel Mines is set to more than triple the size of its attributable nickel production and operational cash flows over the next 15 months.”

Construction costs for Oracle Nickel project together with the power plant will not be more than $750m, the miner said.

As per the terms of the agreement, Shanghai Decent will play a lead role in the design and construction of Oracle Nickel.

Shanghai Decent will also be responsible for compensating for any construction costs exceeding $750m.

Nickel Mines will make the investment in the Oracle Nickel project under a replica structure to its Hengjaya Nickel, Ranger Nickel and Angel Nickel investments.

The company will buy the stake in the project through two Singaporean incorporated holding companies.

In September this year, Nickel Mines has signed a binding memorandum of agreement (MoA) with Iriana Mutiara Mining (IMM) to acquire the Siduarsi nickel-cobalt project in Indonesia.