Currently (still – TISCO wants to change that) China’s largest stainless steel producer, TSINGSHAN Group, has just inked a deal with SILKROAD Nickel to supply 2.7 million MT of high-grade nickel ore.
Catalist-listed laterite nickel ore producer SILKROAD in Indonesia announced the deal in a regulatory statement on Monday, saying it will supply PT Ekasa Yad Resources with 2.7 million metric tons of high-grade nickel ore from this month until December 2022, with a minimum quantity of 50,000 metric tons per month.
Contract has an estimated value of more than $90 million
The contract has an estimated value of more than US $90 million, based on the Indonesian government’s benchmark price for nickel, according to the company.
Hong Kah Ing, chief executive of Silkroad Nickel, commented, “The Group is preparing to deliver its first shipment under the agreement within the next two weeks and expects to gradually increase its production from April 2021 to meet the new offtake commitments under the agreement.”
The nickel ore is expected to be used for the battery industry
The nickel ore is expected to be used to meet growing demand from the emerging electric vehicle battery industry. The Group is investing in its downstream nickel pig iron processing plant in 2021 and intends to use part of the cash flows generated from this agreement for the construction of its planned RKEF (rotary kiln electric furnace) smelter project.
Nickel prices down by up to 14% at the end of February
At the end of February, nickel prices on the London Metal Exchange (LME) and Shanghai Futures Exchange (SHFE) had plummeted. After TSINGSHAN announced to supply 100,000 MT of nickel matte to China for battery production.
Therefore, the estimated value of the nickel ore deal, between Tsingshan and SILKROAD and which is supposed to be based on the Indonesian government’s benchmark price, could be significantly different from the actual value. Also, the ultimate use of the high-grade nickel ore in the battery industry is only assumed.
For March 2021, the Indonesian government had still set the benchmark price for high-grade nickel at $18210.39/mt. Today, nickel is quoted on the LME at just over $16000/mt.
- Nickel falls – Who is to blame? Nornickel or Tsingshan?
- Indonesia, Tsingshan and the crashed nickel – What is really happening in the nickel market?
- Fear of TISCO? 18 million tons of stainless steel output in planning
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