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Poseidon Nickel will not renew its offtake agreement with BHP Billiton to supply ore to the latter’s Leinster concentrator in Western Australia from its Mt Windarra project in the vicinity, following delays to formal approval for the delivery.
The company has submitted a proposal to the minister of state development to process ore from Windarra at its concentrator at the Black Swan facility, also lacated in Western Australia, it said on Tuesday June 9.
Poseidon had signed a two-year offtake agreement with BHP Billiton last year for a minimum quantity of 350,000 tpy of ore to be supplied to the Leinster concentrator.
“Poseidon had initially believed that a target of first ore deliveries in February this year would be feasible, however this date has clearly not been met and no timeframe for receipt of the approval has been provided,” it said.
“It is a matter for BHP to resolve,” ceo David Singleton had told Metal Bulletin in an interview earlier this year.
“Part of the rationale for the purchase of Black Swan was to cover the risks of such an event and to provide long term processing security for Windarra,” Poseidon said.
“Black Swan includes a full nickel ore processing plant that has sufficient capacity to process ore from Windarra in addition to ore sourced from the Black Swan open pit,” the miner said, adding that Black Swan currently holds approvals to operate and is formally in care and maintenance.
“The announcement prepares the way for the second stage in our strategy which is the recommencement of operations at Windarra,” Singleton said in the statement.
“This would eventually result in us having two operational processing plants at Black Swan and Lake Johnston being fed from three mines including Windarra,” he added.
The Black Swan project includes a nickel sulphide concentrator plant, an open pit mine and the Silver Swan underground mine.
Besides Black Swan and Mt Windarra, Poseidon Nickel also owns the Lake Johnston nickel operation located about 540km east of Perth, Australia. The operation includes the Maggie Hays and Emily Ann underground nickel mines.
Deepali Sharma deepali.sharma@metalbulletinasia.com