Strategic Upscaling Of Downstream Refining Business
Blackstone Minerals Limited (ASX:BSX) and Trafigura Pte Ltd have signed a Non-Binding Letter of Interest (LOI) for the potential supply of nickel and cobalt products to Blackstone’s Vietnam operations.
Blackstone Minerals’ Managing Director, Scott Williamson, said the company views this intended arrangement as part of its strategy to upscale its downstream refining business and its vision to become a significant global supplier of downstream nickel products for the Lithium-ion battery industry:
The LOI relates to a potential agreement for Trafigura to supply certain quantities of nickel and cobalt products to Blackstone, in respect of the production by Blackstone of downstream products for the Lithium-ion battery industry at the Ta Khoa Nickel Project in Vietnam.
Trafigura is one of the largest physical commodities trading groups in the world and is one of the leading physical commodities traders involved in copper, zinc, lead, nickel and cobalt trading.
Blackstone’s Scoping Study contemplates construction of a downstream refinery with the ability to process up to 200ktpa of concentrate, sourced entirely from mining operations at the Company’s Ta Khoa Project (refer ASX announcement 14 October 2020);
Mr Williamson said Blackstone intends to upscale its downstream refining business, through the staged construction of additional refining capacity. This intended arrangement reflects the expectation by Blackstone that additional downstream refining capacity will be met by materials sourced from third-parties.
Blackstone’s downstream strategy is in response to recent discussions with major players in the Lithium-ion battery industry which continue to focus on rapidly increasing demand for downstream nickel products.
The company will continue to engage with parties interested in Blackstone’s downstream products, including ongoing discussions with multiple potential joint venture partners regarding various offtake financing and or other funding options.
Mr Williamson said Blackstone will commence studies and permitting for the downstream business. In parallel with the completion of a Definitive Feasibility Study (DFS), a pilot and demonstration plant will be commissioned in-country. The pilot and demonstration plant will be used to advance downstream process flowsheets focussed on producing NCM precursor products.
“We are delighted to have laid the foundations for our relationship with Trafigura, a globally significant trading company. Blackstone is taking steps to become a significant global, green nickel product supplier catering to the battery market,” Mr Williamson said.
“We believe Vietnam is ideally situated to manufacture green nickel products, given its competitive costs, abundant supply of renewable energy and excellent infrastructure. In recent years, the country has demonstrated an enviable record of attracting foreign direct investment, particularly from Asian countries.
“In addition, our strategy to upscale the downstream business is particularly pertinent, given leading battery manufacturers have indicated the potential to construct battery manufactory facilities in country.”
“The economic return on capital invested downstream is underpinned by superior margins achieved by producing downstream products. We are confident we can deliver a robust downstream processing flow sheet, enabling value to be realised from our mining inventory at Ta Khoa, as well by purchasing and subsequently refining of a range of nickel and cobalt materials.
“The purchase of third-party nickel and cobalt materials not only adds scale to the downstream business, it also adds diversification and reduces risk across the Company’s portfolio of assets in Vietnam.”
