New Chinese Offtake agreement for Western Areas

Western Areas Ltd announced that it has negotiated and entered into an Offtake Contract with the Tsingshan Group, through its associated entity Golden Harbour International Pte Ltd, to import raw materials for the production of stainless steel. Tsingshan is China’s largest producer of stainless steel, particularly the high nickel content 300 stainless series. Tsingshan has advised that it is the largest consumer of nickel products in China and use approximately 25% of China’s total annual consumption of nickel.
Western Areas Managing Director, Dan Lougher, said the agreement with Tsingshan was many years in the making and followed from the Company’s desire to capture as much value as possible for the nickel in concentrate sold by Western Areas.
“Over three years ago, Western Areas recognised Tsingshan as an innovator in the production of stainless steel and since then we have developed a close working relationship through the sharing of technical knowledge and many site visits,” Mr Lougher said.
“Tsingshan is clearly leading the charge in China to produce a greater proportion of the higher quality 300 series stainless steel product, which contains up to four times the amount of nickel than 200 series stainless. With this in mind, it has been a specific Western Areas strategy to innovatively position itself in the stainless steel supply chain, with the ultimate objective of delivering a stronger bottom line to our shareholders through investigating non-traditional markets and thereby capturing a greater share of the value of the nickel we produce.
“Together with Tsingshan, we are capturing this additional value as Tsingshan intends to utilise a proven and highly integrated process to produce stainless steel, incorporating roasting of the nickel concentrate, which has significant productivity benefits over the conventional smelting and refining processes.
“As Tsingshan is China’s largest consumer of nickel and producer of ferro-nickel, it makes clear strategic sense to take the advantage of linking our company directly with the end user,” Mr Lougher said