First Quantum Minerals Ltd. has entered a binding agreement to sell a 30% equity interest in the Ravensthorpe Nickel Operation in Western Australia for $240 million in cash to POSCO, a large South Korean steel producer. First Quantum will retain a 70% interest in Ravensthorpe and continue as the operator. In addition to the transaction, POSCO and First Quantum have also agreed to evaluate a strategic partnership to generate battery precursor materials from Ravensthorpe’s production.
Under the terms of the transaction, POSCO will receive a long-term offtake agreement for 7,500 metric tons per year (mt/y) of nickel in mixed nickel-cobalt hydroxide precipitate (MHP), beginning in 2024. The balance of Ravensthorpe’s production will continue to be marketed by First Quantum. The transaction is subject to certain conditions including approval by the Australian Foreign Investment Review Board (FIRB). The transaction is expected to close sometime in the third quarter of 2021. First Quantum said it used the proceeds to pay down debt.
In addition to being the world’s fourth-largest steel producer, POSCO is also 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.
As part of the transaction, the two companies have also entered into a Memorandum of Understanding to explore a partnership to produce battery cathode precursor materials, likely in the form of nickel sulphate, by using the MHP from Ravensthorpe. First Quantum and POSCO will work together over the coming months to advance this potential partnership.
Ravensthorpe is a large-scale, open-pit nickel and cobalt operation located in Western Australia, 150 kilometers (km) west of Esperance. Ravensthorpe 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.
