Chinese steel and nickel producer Tsingshan has signed a two-year offtake deal to buy nickel ore from Indonesian nickel resources firm Silkroad Nickel.
Silkroad will supply Tsingshan 2.7mn dry metric tonne (dmt) of high-grade nickel ore from March 2021 to December 2022, with a minimum quantity of 50,000 dmt/month, from its laterite nickel ore mine at Morowali in Indonesia’s central Sulawesi.
“Silkroad is preparing to deliver its first shipment under the agreement within the next two weeks and expects to gradually increase production from April 2021 onwards to fulfill the new offtake commitments,” Silkroad’s executive director and chief executive officer Hong Kah Ing said.
The contract value is estimated at over $90mn, based on benchmark nickel ore prices set by the Indonesian government.
Tsingshan earlier this month agreed tosupply nickel matteto domestic cobalt smelter Huayou Cobalt and new energy materials producer CNGR. The deal has dented market confidence, while demand for nickel material from the power battery sector is expected to rise in the longer term. The nickel ore supplies from Silkroad will be used for Tsinghan’s nickel matte production.
Tsingshan also plans to build a 2,000MWclean energy facilityin Indonesia in the next 3-5 years to support its operations in the southeast Asian country.
Silkroad signed a 10-year agreement in January tosupply laterite nickel oreto major Chinese lithium producer Jiangxi Ganfeng. The offtake volume will be at least 1mnt/yr at the market price.
Arguslast assessed prices for 1.8pc grade nickel ore at 860-890 yuan/wet metric tonne ($132-137/wmt) ex-works yesterday, up by Yn10/wmt from 4 March because of higher mining costs and freight fees in recent weeks.