Glencore in box seat for Nickel West
Glencore's push to acquire BHP Billiton's unwanted Nickel West assets could bring a number of abandoned nickel assets into play, as well as substantially lowering the operating costs at Glencore's existing operations at Murrin Murrin.
Industry sources suggest Glencore, believed to have the only formal bid for Nickel West on the table, believes its offer for the unwanted BHP offer is likely to stand out from a potential rival bid by China's Jinchuan Group on its potential impact on the local industry as well as on price.
The Hong Kong and London-listed trading and mining giant is understood to have bid $190 million to $230 million for the assets, far below the price BHP had hoped to receive, but has also carefully crafted a pitch to both BHP and the State Government that it is the best option as an owner going forward.
Glencore's Murrin Murrin laterite nickel processing facility has been taking nickel sulphide concentrate from BHP's Mount Keith operations for much of the year, producing 4000 tonnes of nickel, or about 18.5 per cent of its 21,600t WA total for the first half of 2014, from the Mount Keith concentrate.
It is understood the concentrate is high in arsenic and unsuitable for the Kalgoorlie smelter because of emission concerns. Industry sources suggest the trial feed could provide the template for a major turnaround in the Nickel West business.
Arsenic is a significant impurity in many of WA's nickel deposits. It is a major problem in traditional smelters, such as BHP's facility in Kalgoorlie, as environmental rules severely restrict the levels of arsenic emitted into the atmosphere. That means high-arsenic concentrate, such as that from Mount Keith and some Kambalda mines, must be blended down before it can be fed into the smelter.
When fed through high temperature and high pressure autoclaves such as those at Murrin Murrin, however, the arsenic drops out as a relatively inert compound and can be disposed of in an ordinary tailings facility. Nickel sulphate concentrate is also exothermic in nature - producing heat in the autoclave - saving energy costs and lifts the Murrin feed grade substantially.
With other major undeveloped WA nickel deposits such as Norilsk Nickel's massive Honeymoon Well project also suffering from arsenic problems and ore in nickel districts such as Widgiemooltha, the integration of Murrin into Nickel West could open third-party sales into the Nickel West supply chain.
