Ground Breakers: Nickel Industries’ Indonesian nickel mine now one of 10 largest deposits in the world

  • Nickel Industries says its Hengjaya mine in Indonesia is now in the 10 largest nickel deposits in the world
  • The company’s share price ran more than 6% as it announced the mine would become a key supplier to HPAL plants to process laterite nickel into mixed hydroxide for EV batteries
  • Liontown Resources announces deal to build mega renewables grid at Kathleen Valley lithium mine

Nickel Industries (ASX:NIC) is up by over 6% this morning after announcing a mega resource upgrade at its Hengjaya mine in Indonesia that could position the ASX-listed company as one of the world’s key suppliers of nickel for stainless steel and batteries.

With its Angel nickel project commissioned and Oracle RKEF plant under construction, by 2023 the fast growing nickel producer expects to be in the top-10 suppliers of nickel metal worldwide with nameplate capacity on a 100% basis of 130,000t of nickel in nickel pig iron.

A lot of the focus for NIC has been on those rotary kiln electric furnace lines it has constructed in quick time with the help of major shareholder and Chinese stainless steel giant Tsingshan.

But its Hengjaya mine is an impressive asset in its own right, containing 300Mt of ore at an average grade of 1.22% nickel and 0.09% cobalt, equating to 3.7Mt of nickel metals and 270,000t of cobalt.

Covering 1784 hectares of the 5983ha Hengjaya concession that new resource has seen measured tonnes increase 333%, indicated resources up by 20% and inferred resources up 53%.

It has come from drilling that has included grades of 6.36%, which are so high statistical top cuts of 2.42-2.91% nickel needed to be applied to prevent the nugget effect from overestimating the resource estimate.

NIC’s high grade saprolite resource of 72Mt at 1.8% nickel will be used to supply its Hengjaya, Ranger and Oracle plants, which need around 8.8Mt of ore a year to run, with Hengjaya to supply 3.5-4Mt a year once a haul road linking the mine to the industrial park is done.

Battery power

Its limonite resource of 151Mt at 1.2% nickel and a high 0.14% cobalt on the other hand will be a long-term supplier to new high pressure acid leach projects at the Morowali Industrial park owned by companies like Huayue and QMB, who will need up to 20Mt of ore a year to make nickel and cobalt mixed hydroxide for electric vehicle batteries.

“This significant limonite resource also leaves the Hengjaya Mine well positioned to supply any future HPAL projects the Company may invest in,” NIC said.

NIC MD Justin Werner said the resource update positions Hengjaya among the world’s ten largest nickel resources.

“We are delighted to deliver a significant increase in our Resource at the Hengjaya Mine from 2.4 million tonnes to 3.7 million tonnes of contained nickel metal representing a 56% increase, with further upside remaining. This places the Hengjaya Mine amongst the top 10 global nickel resources, highlighting the world class size of the deposit,” he said.

“The Hengjaya Mine is the closest large tonnage, high grade saprolite and limonite mine to the Indonesia Morowali Industrial Park (‘IMIP’) and one of its largest ore suppliers.

“This underscores the important strategic value of the mine in providing secure, long-term supply to the Company’s RKEF operations within IMIP, being HNI and RNI, as well as Oracle Nickel (‘ONI’) which is currently under construction and due to commission in October this year.

“We are also pleased to further announce that the Company has received its environmental approval (‘AMDAL’) to complete construction of the 16km haul road which will link the Hengjaya Mine to IMIP. 10km of the 16km is already complete and we expect the remainder to be completed by the 2nd quarter of next year.”

The Hengjaya mine reported a record EBITDA of US$27.6m for the first half of 2022, Werner said.

Liontown pledges 60% renewables with power deal

Liontown Resources (ASX:LTR) says its Kathleen Valley lithium mine in the northern Goldfields will boast the largest off-grid wind, solar and battery storage capacity of any mine in Australia.

The $3.9 billion capped developer says it will have a renewables penetration of more than 60% once operations of the 500,000tpa lithium spodumene mine begin in the first half of 2024.

Constructed by Zenith Energy, the 95MW hybrid renewables has and diesel plant will include five wind turbines capable of generating 6MW each, a 16MWp fixed axis solar PV array and 17MW/19MWh battery storage system, alongside 27MW of gas and 5MW of diesel standby generation.

Importantly the thermal power generation will be able to operate in “engine off” mode, meaning 100% renewable energy is possible at times of high solar and wind resource.

The installation of the renewable power is an important aspect for the new lithium mine, in a world where high ESG credentials are considered a prerequisite for sales to western customers like carmakers.

“Awarding the Power Supply contract is another important milestone for Liontown and the development of Kathleen Valley. We continue to deliver on our ESG credentials by taking real action to reduce the Project’s carbon emissions from the outset,” LTR boss Tony Ottaviano said.

“We are delighted to partner with Zenith Energy, an experienced and highly competent power producer, following completion of a thorough competitive tender and commercial negotiation process.

“We believe Zenith Energy is an ideal partner to deliver an industry leading hybrid power station to meet Liontown’s energy needs and requirements for a high capacity renewable solution.

When fully constructed, this hybrid power station will enable Liontown to exceed our target of achieving at least 60% renewable energy at Project start-up and beyond.”

LTR said the deal would also include a collaboration between Zenith and the Tjiwarl Aboriginal Corporation’s contracting business to deliver low carbon power installations for both mining companies and local communities in the Tjiwarl native title area.

Liontown shares were down around 2% after rising more than 6% in the past five days along with a bullish run for lithium stocks.

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