Glencore dives in to Sirius nickel despite weak prices

By @chelean on
Glencore
The logo of Glencore is pictured in front of the company's headquarters in the Swiss town of Baar, November 13, 2012. Commodities trader Glencore is set to all but clinch its $30 billion takeover of Xstrata this week, despite a potential snub for the miner's board if, as expected, investors scrap a controversial pay plan for its managers. Shareholders in both Glencore and Xstrata, the world's fourth-largest diversified miner, will vote in Switzerland on Tuesday. Picture taken November 13, 2012. Reuters/Michael Buholzer

Glencore has been experiencing financial troubles due to weak commodity prices, but this did not prevent the mining giant from taking in the remaining off take from Sirius Resources’ Nova mine in Western Australia.

The Anglo-Swiss multinational mining giant has an existing deal that completes the off take agreement process for Sirius. At the moment, Glencore will purchase half of the copper and nickel concentrate produced at Sirius’ Nova mine for the first three years of its production. The deal came after BHP Billiton decided to acquire half of the first three years’ concentrate from the Nova nickel mine.

BHP and Glencore both own nickel operations within the perimeter of a few hundred kilometres from the Nova mine. The concentrate intended for BHP will go to its Nickel West smelter at Kalgoorlie, while the concentrate that Glencore has bought will be shipped overseas out of either Geraldton or Esperance ports.

While these deals are being made and agreed upon, Nova is not expected to produce actual nickel and copper until late 2016. It is important to note that 100 percent of production for Nova’s first three years have already been bought during a time when nickel prices are its lowest, meaning that the buyers are expecting high quality concentrate.

Mark Bennett, managing director at Sirius, expressed his satisfaction over the completed deals and off take process, reported the Sydney Morning Herald . Sirius is at the centre of a takeover bid from Independence group, and the deal spearheaded by Glencore will not affect rumours of a rival bid.

Glencore first expressed interest in the Nickel West sale that was set aside by BHP Billiton in 2014, since the decreasing commodity prices reduced the possibilities of closing any deals. A meeting that will focus on the takeover will take place on September 3.

While soft metal prices continue to affect operations, offtake agreements, and production in mines across the world, developing mines continue their own advancements. Low nickel prices fail to affect the developments happening over at Amur Minerals Corporation ( London AIM: AMC ), an emerging top producer situated in the Russian Far East.

The company is planning to build its own smelter at its Kun-Manie deposit in the Amur Oblast Region, which is expected to hold a JORC estimate of 830,000 equivalent tonnes of high-grade nickel and copper. The company’s project sits on a hefty load, as its Kun-Manie deposit is considered to be one of the world’s top 20 nickel-sulphide deposits.

Robin Young, CEO at Amur Minerals, recently signed an agreement with the “Far East Baikal Region,” a sovereign Russian group formed under Russian President Vladimir Putin. The group, named after the Russian Far East and Baikal Region, is responsible for the development of infrastructure within the area.

“One of the projects that they had is the expansion and renovation of the local airport, but their real key developments target are road and power. These are two key elements to the development of our project,” stated Young in an interview with DirectorsTalk.

Correction:
An August 20 version of this story erroneously said Amur Minerals Corporation is currently building its own smelter at its Kun-Manie deposit. This is not correct. The company is only planning and talking to smelter suppliers.
 

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