Western Areas signs offtake deal with Nickel West

Western Areas has locked in its second nickel offtake agreement in as many days, announcing today a deal with BHP Billiton subsidiary Nickel West for product from its Forrestania nickel mine.

The offtake contract with Nickel West is under new terms, and will begin in February next year when an existing deal expires.

Nickel West will purchase up to 10,000 tonnes of nickel contained in concentrate per year for three years from Forrestania and transport it to its Kambalda concentrator.

The deal follows news yesterday that Western Areas had finalised an offtake agreement with China-based Tsingshan Group for another 10,000t of nickel in concentrate per annum over three years.

The two agreements complete a tender process Western Areas initiated in September for 20,000t of nickel in concentrate per annum, which is equal to about 90 per cent of Forrestania’s annual production.

The new contracts will deliver a greater return to Western Areas than its current agreements which are close to expiration.

“Western Areas has a strong fundamental belief in the long term sustainability of nickel production in Western Australia and the execution of this three-year contract demonstrates our vision of a positive future,” Western Areas managing director Dan Lougher said.

“Nickel West is a quality partner and the relationship developed over the prior seven years is stronger than ever.

“Both parties will benefit from this new contract, due to the high reliability, quality and consistency of supply from our Forrestania operations.”

Shares in Western Areas were 3 per cent lower to $3.18 each at the close.