PERTH (miningweekly.com) – Metals miner Independence Group has taken the decision to continue selling nickel from its Nova operation, in Western Australia, rather than investing in a downstream processing center.

The company earlier this year launched parallel work streams to investigate a new tender process for the nickel product from Nova, along with a prefeasibility study (PFS) into potential downstream processing to create a battery-grade nickel sulphate product.

Independence on Friday told shareholders that strong demand for the Nova concentrate had resulted in materially improved terms, compared with the current offtake agreements.

The company is now finalising nickel concentrate agreements over the Nova concentrate, with equal volumes to be awarded to mining major BHP’s Nickel West division and Trafigura. All of the copper concentrate at Nova would also be awarded to Trafigura under a separate offtake agreement.

While the downstream PFS had demonstrated a technologically and cost competitive process for converting nickel sulphide concentrate into nickel sulphate, Independence has decided not to progress to a detailed feasibility study, given the materially improved commercial terms achieved under the new offtake agreements.

“Its pleasing to have brought these two workstreams to completion, and to have achieved the material improvement in commercial terms for our new offtake agreements,” said Independence MD and CEO Peter Bradford.

“The tightening supply and strong demand forecast for nickel and copper has led to strong competition for Nova concentrate, which is now established as a high quality, highly desirable product for end-users. The increased shareholder value captured by these agreements is significant.”

Bradford noted that the work completed as part of the nickel sulphate downstream PFS had demonstrated that the company had developed an innovative processing technology to more efficiently produce nickel sulphate for the clean energy and electric vehicle battery market at a lower cost and in an environmentally sustainable manner.

“We recognised that this project would have to compete with tightening supply and higher payabilities in the market and as a result of the improved nickel payabilities obtained, the returns on this project are unlikely to meet Independence’s investment hurdles for construction of such a facility in Western Australia, hence the decision not to advance this project beyond the PFS.”

However, Bradford noted that the company remained committed to vertical integration aligned with its strategy, and was currently exploring partnership opportunities both in Australia and overseas, to leverage the technology that it had developed.