Special Report: Blackstone managing director Scott Williamson believes the future of nickel is in the burgeoning battery sector and that the company’s Ta Khoa project is ideally suited to meet this growing demand.
And there is good reason for this given that battery manufacturers have found that adding nickel to their lithium-ion batteries increases their energy density, which allows them to store more power.
“At the moment only about 5 per cent of nickel goes into batteries but going forward that will become almost 50 per cent of all nickel,” Williamson told Stockhead.
This is good news for Blackstone Minerals (ASX:BSX), which took a 12-month option in May to acquire a 90 per cent interest in the Ta Khoa project, about 160km west of Hanoi.
The project includes the Ban Phuc nickel mine, which includes processing equipment such as a 450,000-tonne-a-year concentrator that was built to Australian standards and would require little work to bring back online, a fully permitted tailings facility and a modern 250-person camp.
Ban Phuc was operated as a mechanised underground nickel mine from 2013 to 2016 and generated $US213m ($311.3m) in revenue during this period of falling nickel prices.
Blackstone’s work to date has identified a number of new nickel sulphide targets, while drilling has not only delivered broad nickel sulphide intersections but also uncovered significant platinum, palladium and gold – collectively known as platinum group elements (PGE).
Williamson believes that the most exciting part about the project is the ability to quickly move towards downstream processing.
“We’ve already got the existing nickel concentrator and we could convert the concentrate it produces into a nickel sulphate or a battery product,” he said.
“It all comes back to how quickly we can build the downstream process and that’s about a two to three-year process. So we need to do scoping studies and bankable studies.”
He pointed out that having the concentrator onsite represented over $130m of capital infrastructure already sunk into the project.
“We can focus on finding the next circa $100m to build the downstream process.”
Focusing on finished or advanced downstream products also allows Blackstone to avoid the Vietnamese government’s 20 per cent tariff on concentrates, which was introduced to incentivise mining companies to build downstream facilities.
“With nickel concentrate, you don’t get the full LME nickel price but with an advanced product, you can get better payability and sometimes even a premium to the nickel price,” Williamson added.
“We haven’t decided yet where the downstream facility will be situated – there here are several suitable locations throughout Vietnam, the question is do we do it near the port of Hai Phong, where LG is looking to build a battery factory, or at the mine gate, Hanoi, or the Son La province as the city has industrial zoning.”
Williamson also said that while the focus was primarily on the nickel, the PGE content could cover a lot of the operating costs.
“The previous owners didn’t assay for platinum, palladium and gold but we are seeing up to 1 gram per tonne,” he added.
“We still need to do the study to determine the mining method, but if it winds up being an open pit then the byproduct credit from the platinum becomes very significant.
“It will come through the same processing route. There will be a small addition to the circuit but most of it will be in the same flotation into that downstream process and you will be able to extract the PGEs.”
Looking ahead, Williamson said Blackstone was aiming to define a maiden resource and complete a scoping study within the next six months.
“Between now and then we have four drill rigs spinning. There are 25 targets that are untested, so at the same time that we are drilling out the main ore body, we will also be searching for new discoveries,” he said.
“There will be a dual focus of moving the mine back into production and really exploring the geology. The previous owner really didn’t do any exploration outside of the main orebody.”
He added that while the company was keen to maintain its 90 per cent interest in the mine and concentrator, it would bring in a partner to help build the downstream processing part of the project.
“The idea is, let’s say we need $100m, we find a partner that can help us fund that and they become a partner in that part of the business.”