MinRes still keen on third party lithium processing hub despite breakdown of Lake Johnston plant deal
\nOrica boss Sanjeev Gandhi says gold, copper, coal and iron ore are all keeping commodity demand high, but nickel and lithium miners are providing less work
\nSmall lithium players among top ressie gainers, while general materials space sags<\/p>\n
Mineral Resources\u2019 (ASX:MIN)<\/a> plans for a third lithium processing plant in the Goldfields are up in the air after it was revealed Chris Ellison\u2019s mining giant had pulled out of a deal to buy a disused nickel plant. But the $15bn miner says it remains keen to develop a third party processing hub in the region.<\/p>\n Poseidon Nickel (ASX:POS)<\/a>, which announced the $15m \u2018binding head of agreement\u2019 on March 18, revealed MinRes had given notice of its intention to terminate the agreement, a week after it announced the buyer had asked to negotiate its terms.<\/p>\n Lake Johnston is a 1.5Mtpa processing plant which, crucially, contains a float circuit.<\/p>\n This could, theoretically, have been retooled so MinRes could pass fine spodumene material unsuited for cheaper DMS processing from its Mt Marion and Bald Hill plants through the flotation step at Lake Johnston.<\/p>\n It hasn\u2019t produced nickel since 2013. Its prospects of a revival as a nickel mine were dealt a further blow by a collapse in nickel prices last year off the back of rising cheap Indonesian supply, described by major player BHP (ASX:BHP)<\/a> as a structural shift in the market that could sustain surpluses for the rest of this decade.<\/p>\n But a bevy of explorers have waded into the region in recent times after high grade lithium strikes from TG Metals (ASX:TG6)<\/a> at its Burmeister discovery sparked a land rush in the Lake Johnston region.<\/p>\n The news comes after MinRes traded its stake in Bill Beament-led developer and mining services contractor Develop Global (ASX:DVP)<\/a>, which completed a scoping study on its nearby Pioneer Dome lithium mine north of Norseman this week.<\/p>\n It could shave over $200 million of its capex by developing only the mine (a shallow open pit transitioning to an underground development) and processing its ore through a third party, an approach it prefers if 6% Li2O spodumene prices are below US$1500\/t.<\/p>\n Despite the termination a spokesperson for MinRes said the company still wants to develop a Goldfields processing hub.<\/p>\n \u201cUpon completion of legal due diligence, MinRes gave notice of termination of the Heads of Agreement,\u201d they said.<\/p>\n \u201cThe company remains committed to a strategy to develop a lithium processing hub in the Goldfields region.\u201d<\/p>\n In March, RBC Capital Markets analyst Kaan Peker said it would likely have cost a \u201cfew hundred million\u201d to repurpose the plant, but would still have delivered \u201cnotable capex savings\u201d compared to a greenfields build.<\/p>\n \u00a0<\/p>\n <\/span>\u00a0<\/p>\n Orica (ASX:ORI)<\/a> boss Sanjeev Gandhi says the mine blaster and sodium cyanide supplier is seeing strong commodity demand across coal, gold and copper.<\/p>\n His comments come off the back of a half year results release that saw a big lift in half year NPAT from $122.6 million to $337.5m.<\/p>\n EBIT was up 10% to $353.7m, with Orica delivering a 19c interim dividend, a payout ratio of 52%.<\/p>\n \u201cCommodity demand across the globe and in Australia has been consistent. Surprisingly thermal coal \u2013 not a surprise to me frankly \u2013 has been strong. You just look at the export stats out of Newcastle. We\u2019ve seen strong demand and exports for thermal coal,\u201d Gandhi said.<\/p>\n \u201cWe\u2019ve seen copper going great guns, I mean clearly US$10,000 doesn\u2019t happen if there\u2019s excess supply and not enough demand. So copper has been doing very well, gold historical highs.<\/p>\n \u201cThe challenge with gold is \u2026 that it\u2019s not easy to access new resources in gold and the new potential resources are quite dilute. And this means you need to blast more and you need to extract more, which is just a positive for our blasting business with gold and then clearly for the sodium cyanide business.<\/p>\n \u201cThe strong demand for gold is going to continue in my view and we are running hard to keep up with the demand both for sodium cyanide as well as for our blasting services in gold and this is applicable globally, not just here in Australia.\u201d<\/p>\n He said iron ore and met coal remained solid, with demand from China and emerging demand from India, where Orica also supplies integrated iron ore and steel producers.<\/p>\n Perhaps counter-intuitively, Gandhi said e-mobility in China, including a \u2018cash for clunkers\u2019 program offering ICE drivers an incentive to cash in cars and buy EVs, was supporting iron ore and met coal at the same time as Orica was seeing weakness in Australian nickel and lithium.<\/p>\n \u201cThis is going to drive demand for e-mobility within China, which will in turn drive demand for steel there and then clearly for us here iron ore as well as for met coal,\u201d he said.<\/p>\n \u201cSo I\u2019m quite positive on most commodity outlooks, the weakness I do see \u2014 not a surprise to anybody \u2014 is lithium.<\/p>\n \u201cWe have seen lithium slow down because of the pricing fluctuations, and nickel, but nickel specifically here in Australia.<\/p>\n \u201cWe do cater to nickel in Indonesia, we\u2019ve not seen any slowdown there and also in other parts of the world but in Australia we have seen some slowdown in nickel and also back in lithium.\u201d<\/p>\n Orica shares were up 1.1% at 2pm AEST, though the company said inflation and energy costs would remain an \u201congoing challenge\u201d, despite saying it had performed above expectations against initial guidance before considering the newly acquire Terra Insights and Cyanco businesses.<\/p>\n But Gandhi also warned high East Coast gas prices had also led to decisions to shift investments offshore.<\/a><\/p>\n \u00a0<\/p>\n <\/span>\u00a0<\/p>\n \u00a0<\/p>\n Sayona Mining (ASX:SYA)<\/strong><\/a> (lithium) +5.4%<\/p>\n ioneer (ASX:INR)<\/strong><\/a> (lithium) +4.9%<\/p>\n AIC Mines (ASX:A1M)<\/strong><\/a> \u00a0(copper) +3.1%<\/p>\n Liontown Resources (ASX:LTR)<\/strong><\/a> (lithium) +2.8%<\/p>\n \u00a0<\/p>\n NexGen Energy (ASX:NXG)<\/strong><\/a> (uranium) -9.3%<\/p>\n Energy Resources of Australia (ASX:ERA)<\/strong><\/a> \u00a0(uranium) -5.6%<\/p>\n Coronado Global Resources (ASX:CRN)<\/strong><\/a> (coal) -4.9%<\/p>\n Iluka Resources (ASX:ILU)<\/strong><\/a> <\/strong> (mineral sands\/rare earths) -3.6%<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n <\/span>\u00a0<\/p>\n \u00a0<\/p>\n <\/span>\u00a0 The post Monsters of Rock: MinRes aborts Lake Johnston plant mission but still wants to build a Goldfields lithium hub<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"Mineral Resources (ASX:MIN) and Poseidon Nickel (ASX:POS) share price today<\/h2>\n\n
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