Nickel Mines Acquires Tsingshan Group’s Unit in Indonesia

Australian miner, Nickel Mines Ltd., bought 70 percent of PT Angel Nickel Industry (ANI), a unit of Shanghai Decent Investment (Group) Co. Ltd., for US$490 million to double its nickel production in two years period - Photo by Eramet Office

JAKARTA (TheInsiderStories) – Australian miner, Nickel Mines Ltd., bought 70 percent of PT Angel Nickel Industry (ANI), a unit of Shanghai Decent Investment (Group) Co. Ltd., for US$490 million to double its nickel production in two years period. The projects located in Weda Bay Industrial Park on Halmahera Island, North Maluku province

The company its expecting to produces 25,200 tones of nickel pig iron a year, out of the new unit of publicly listed, PT Harum Energy Tbk (IDX: HRUM) total production capacity of 36,000 tones. For comparison, the Hengjaya Nickel and Ranger Nickel projects, each have an annual production capacity of 15,000 tones of nickel pig iron.

Combined, the company’ 80 percent interest’ units represents 24,000 tones per annum of attributable nickel metal production. Under the terms of the deal, Nickel Mines will pay the acquisition in stages. First, Nickel Mines will pay $210 million by the end of first quarter (1Q) 2021 to secure an initial 30 percent interest.

Then, Stage 2 worth of $280M pay by the end of 4Q of 2021 to secure a further 40 percent interest. During the signing, the company has paid a $10 million‘ good faith deposit’ to the unit of Tsingshan Group and upon execution of a definitive agreement has committed to a further $20 million‘ down payment.

This initial payment is funded from existing cash reserves with the remaining $460 million to be funded from a combination of cash reserves, debt and equity. The miner assured the seller will contractually commit that the total cost of ANI shall not exceed $700 million. The new unit’ project development activities have commenced with commissioning scheduled by 3Q of 2022.

In the country, Tsingshan Group managed industrial zones under PT Indonesia Morowali Industrial Park (IMIP) as a new nickel production frontier with growing nickel pig iron supply from Indonesia set to increasingly displace higher cost production from China. The chinese firm is collaborating with a number of different partners like Eramet, Zhejiang Huayou Cobalt, and Zhenshi Holding Group.

Presently, there are fou commissioned rotary kiln–electric arc furnace lines (RKEF) and eight RKEF lines nearing completion, with power, port capacity and other ancillary services continuing to be progressively established.

The managing director of the company, Justin Werner said in an official statement, “The acquisition of 70 percent of ANI will more than double Nickel Mines’ attributable annual nameplate nickel metal production capacity. Once again, this transaction represents a compelling investment opportunity and comes at a valuation that we believe is unrivalled in the global nickel market.”

Written by Editorial Staff, Email: theinsiderstories@gmail.com