Steel major Posco will pay $240-million for a 30% equity stake in the Ravensthorpe nickel operation, in Western Australia, mine owner First Quantum announced on Wednesday.

Posco will be provided with a long-term offtake agreement for 7 500 t/y of nickel in mixed-cobalt hydroxide precipitate, beginning in 2024. The balance of the Ravensthorpe production will be marketed by First Quantum, which retains a 70% interest in the mine.

The Canada-based miner and South Korean steelmaker also agreed to evaluate a strategic partnership to produce battery precursor materials, likely in the form of nickel sulphate, from production at Ravensthorpe.

Poco is a leading integrated producer of cathode and anode materials for the electric vehicle (EV) battery sector and is undertaking an expansion of its secondary battery material business for which Ravensthorpe will provide a portion of the feed.

“We are pleased to welcome Posco as our new long-term strategic partner in Ravensthorpe,” said chairperson and CEO Philip Pascall.

“Our respective organisations have complementary skillsets which will allow us to maximise the strategic value of Ravensthorpe as a key long-term supplier of nickel to the EV battery sector. We look forward to working closely with Posco at Ravensthorpe and exploring options to broaden our relationship.”

The Ravensthorpe nickel and cobalt mine, west of Esperance,  produces a high-quality MHP which is a sought-after feedstock for the production of EV battery cathode materials.

Following a successful restart of operations in the first quarter of 2020, the mine is now transitioning to the Shoemaker Levy deposit which will provide stable feed to the plant for the next 20 years. Completion of construction and commissioning works at Shoemaker Levy, including a 10 km conveyor, is expected this quarter.

The transaction is subject to certain conditions including approval by the Australian Foreign Investment Review Board.