Blackstone kicks off downstream refining push with Trafigura deal
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Special Report: Blackstone is working with Trafigura to advance its ambition of becoming a significant supplier of nickel products for the lithium-ion battery (LIB) sector.
Under their non-binding letter of intent, Trafigura – one of the largest physical commodities trading groups in the world – could potentially supply certain quantities of nickel and cobalt products to Blackstone.
Blackstone Minerals (ASX:BSX) plans to upscale its downstream refining business through staged construction of additional refining capacity beyond the original plan in its scoping study for a refinery capable of processing 200,000t per annum of concentrate sourced entirely from its Ta Khoa nickel-copper-PGE project in Vietnam.
This follows discussions with major LIB players that have highlighted the rapidly growing demand for downstream nickel products suitable for the market.
Sourcing nickel and cobalt from Trafigura reflects its expectation that additional downstream refining capacity will be met by materials sourced from third parties.
“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,” managing director Scott 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 addition, our strategy to upscale the downstream business is particularly pertinent, given leading battery manufacturers have indicated the potential to construct battery manufacturing facilities in country.”
He added that superior margins from downstream products will underpin the economics of capital invested in downstream refining.
“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 as by purchasing and subsequently refining a range of nickel and cobalt materials,” he concluded.
Under the scoping study released in October 2020, Ta Khoa looks to be an attractive project delivering robust net present value (NPV) of $US665m ($929m) and internal rate of return (IRR) of about 45 per cent.
NPV and IRR are both metrics used to assess the profitability of a project.
The study also highlighted opportunities to further improve those numbers through staged capital expenditure; credits from by-products such as copper, gold and PGEs; and further exploration.
More recently, drilling at the King Cobra Zone has returned broad and consistent mineralisation along with some of the best intercepts to date including a stunning 127.6m at 1.17 per cent nickel, 0.22 per cent copper, 0.02 per cent cobalt and 0.24 grams per tonne platinum group elements from a depth of just 14m.
This article was developed in collaboration with Blackstone Minerals, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.