WMC teams with China’s Jinchuan (August 09, 2004)

The world’s third-largest nickel producer, Australia’s WMC Resources (WMC-N), is joining forces with Chinese nickel major Jinchuan Group to explore for nickel in China.

The partnership, to be funded on a 50-50 basis, will focus on hunting for nickel sulphides and associated metals in Jinchuan’s home province of Gansu in central China, as well as in other parts of the country.

The board and management of the joint-venture will be drawn from both partners, and there are further provisions for co-development and mining of any nickel-sulphide deposits found.

Jinchuan will further retain first rights to buy any nickel produced by the joint venture. The company already produces 60,000 tonnes nickel annually, or 88% of China’s nickel output.

The close association between WMC and Jinchuan dates back to 1988, when WMC helped Jinchuan build its nickel smelter in Gansu province.

The relationship became even stronger a year ago, when WMC signed a 6-year, US$650-million nickel-supply contract with Jinchuan whereby the former agreed to ship nickel in matte from its Kalgoorlie operations in Western Australia to Jinchuan.

WMC will re-direct sales directly into China when existing contracts with Japan’s Sumitomo Metal and Mining Co. expire, in 2005. As a result, Jinchuan will replace Sumitomo as WMC’s largest nickel-in-matte customer.

The deal covers the sale of 90,000 tonnes of nickel-in-matte between 2005 and 2010. A similar, 30,000-tonne sales agreement was signed with Jinchuan in 2002.