Silkroad Nickel said on Monday it would supply Chinese stainless steel giant Tsingshan Holding Group with 2.7 million tonnes of high-grade nickel ore in Indonesia by the end of 2022, marking its second major customer win this year.
Singapore-listed Silkroad, which mines ore on the Indonesian island of Sulawesi, said in a filing it had inked a contract with Tsingshan unit PT Ekasa Yad Resources worth more than $90 million at current prices and would deliver at least 50,000 tonnes per month from March 2021 to December 2022.
Tsingshan uses nickel ore to make stainless steel raw material nickel pig iron (NPI) in Indonesia and is also pursuing projects to make nickel chemicals for use in electric vehicle batteries in the country, including on Sulawesi.
Indonesia, the world’s biggest nickel ore miner, banned exports of the material from January 2020 as it looks to process more resources at home.
Silkroad Chief Executive Hong Kah Ing said his company is “preparing to deliver its first shipment (to Tsingshan) within the next two weeks and expects to gradually increase its production from April 2021 onwards to fulfill the new offtake commitments.
“The nickel ore is expected to be used to meet the increasing demand from the emerging electric vehicle battery industry,” he added in the filing.
Silkroad, which in January signed a 10-year agreement to sell nickel ore to Ganfeng Lithium, one of the world’s top lithium producers, intends to use some of the proceeds from the Tsingshan deal to build a rotary kiln electric furnace (RKEF) smelter to make NPI, Hong said.
(By Tom Daly; Editing by Kirsten Donovan)