Perth-based Blackstone Minerals (ASX: BSX) has signed a non-binding letter of interest (LOI) which opens the door for Singapore-based commodity trader Trafigura to supply third-party nickel and cobalt to increase the scale of the explorer’s Ta Khoa nickel project in Vietnam.
The company said today the LOI relates to a potential agreement with Trafigura to supply quantities of nickel and cobalt to Blackstone to assist the production of downstream products for the lithium-ion battery industry.
Managing director Scott Williamson says the purchase of third-party nickel and cobalt materials not only adds scale to the downstream business, it also adds diversification and reduces risk across the company’s Vietnam assets.
Blackstone is now advancing the Ta Khoa nickel-platinum group elements project on northern Vietnam and has over recent months reported a series of high-grade drill results.
Downstream refinery planned for Vietnam
Trafigura, with US$147 billion (A$190 billion) in revenue last year, is one of the largest physical commodities trading groups in the world and one of the leading traders in copper, zinc, lead, nickel and cobalt.
Blackstone’s scoping study envisages a downstream refinery in Vietnam with the ability to process up to 200,000 tonnes per annum of concentrate sources entirely from the Ta Khoa project.
The company also plans to scale up this planned refining operation with adding materials from third-party suppliers.
Blackstone says its downstream strategy has been designed in response to recent talks with “major” players in the lithium-ion battery industry.
That industry is continuing to focus on the expected rapid increase in demand for downstream nickel products.
The company says it will now begin studies on, and permitting for, the downstream business.
Plans to become global green nickel supplier
In parallel with the completion of the definitive feasibility study, a pilot and demonstration plant will be commissioned in Vietnam.
“Blackstone is taking steps to become a significant global, green nickel product supplier catering to the battery market,” Mr Williamson added.
He said producing downstream products — especially in Vietnam with its competitive costs, excellent infrastructure and abundant renewable energy — makes for “superior margins”.
“In addition, our strategy to upscale the downstream business is particularly pertinent, given leading battery manufacturers have indicated the potential to construct battery manufacturing facilities in the country,” he said.
Trafigura operates in 48 countries and all shares are held among 850 employees.