PERTH (miningweekly.com) – ASX-listed Nickel Mines has inked a limonite supply agreement with PT Huayue Nickel Cobalt (HNC).

The limonite ore will be supplied to the HNC high pressure acid leach (HPAL) project, which is about to start commissioning within the Indonesia Morowali Industrial Park.

The HPAL project has a planned annual capacity of 60 000 t of nickel and 6 000 t to 8 000 t of cobalt produced as a mixed hydroxide precipitate (MHP), a preferred raw material feedstock for the electric vehicle (EV) battery supply chain.

The ore supply agreement is for an initial volume of 150 000 t grading between 1% to 1.3% nickel, with delivery between the middle of November and the end of December this year.

The limonite ore at Hengjaya mine has historically been treated as overburden and as such, the cost of mining this ore has been expensed. Nickel Mines on Monday noted that the Hengjaya mine has stockpiled 2.14-million tonnes of limonite ore at an average grade of 1.12% and the company is now mobilising the necessary barges and dump trucks to deliver the contracted volumes from the stockpiles.

Following successful delivery of this initial volume of limonite ore, the company and HNC plan to agree pricing and significantly larger volumes for the 2022 calendar year.

“We are delighted to have executed an agreement with HNC for the supply of limonite ore to the HNC HPAL project. This agreement further underscores the significant strategic value of the Hengjaya mine to not just existing nickel pig iron production, but also new HPAL production which is currently being developed within IMIP for the EV battery industry,” said Nickel Mines MD Justin Werner.

“Expansion initiatives undertaken at the mine over the last 12 months have in part been to prepare for the delivery of limonite ore to the IMIP’s HPAL projects and with supply now set to commence, Hengjaya mine, which is strategically located to the Indonesia Morowali Industrial Park, will be critical to the success of the HNC HPAL project’s commissioning and ramp-up. The future supply of limonite ore will now allow us to monetise a much greater portion of the orebody, significantly enhancing the revenue generation from our mining operations.”