The parties will consider a partnership to produce battery precursor materials from production at the Australian nickel and cobalt mine
The Ravensthorpe Nickel Operation includes an open-pit nickel and cobalt mine and a hydrometallurgical processing plant. (Credit: First Quantum Minerals (FQM)/Wikimedia.org)
First Quantum Minerals has agreed to divest a stake of 30% in the Ravensthorpe Nickel Operation in Western Australia to South Korean steel producer POSCO for $240m in cash.
The Canadian mining company will retain a stake of 70% in the project and continue as operator.
The Ravensthorpe Nickel Operation comprises an open-pit nickel and cobalt mine and a hydrometallurgical processing plant, located 35km east of Ravensthorpe and 150km west of Esperance.
First Quantum Minerals had acquired the mine from BHP Billiton in late 2009 for $340m.
Opened originally in 2008, the Ravensthorpe mine was closed within a year of its operation. It was restarted by First Quantum Minerals in late 2011, but had to be closed again in 2017 owing to low nickel prices at that time.
In the first quarter of 2020, the Canadian miner restarted the Ravensthorpe Nickel Operation.
First Quantum Minerals will use the proceeds from the sale of the stake for cutting down its debt.
The Canadian miner has also reached an agreement with POSCO to assess a strategic partnership for producing battery precursor materials from Ravensthorpe’s production.
Starting from 2024, the South Korean steelmaker will be supplied with 7,500 tonnes of nickel per annum in the form of mixed nickel-cobalt hydroxide precipitate (MHP) produced at the mine under a long-term offtake agreement.
The remaining production from the nickel and cobalt mine will continue to be marketed by First Quantum Minerals.
POSCO, which also produces cathode and anode materials for the electric vehicle (EV) battery sector, is carrying out an expansion of its secondary battery material business. For this, the Ravensthorpe mine will supply a portion of the feed.
First Quantum Minerals chairman and CEO Philip Pascall said: “Our respective organisations have complementary skillsets which will allow us to maximize the strategic value of Ravensthorpe as a key long-term supplier of nickel to the EV battery sector.
“We look forward to working closely with POSCO at Ravensthorpe and exploring options to broaden our relationship.”
The deal, which is subject to approval from the Australian Foreign Investment Review Board (FIRB) and certain other conditions, is expected to close during Q3 2021.