CHINA'S Jinchuan Group has agreed to a two-year deal to buy nickel from Western Areas that is not earmarked for BHP Billiton.
Western Areas said it had signed an offtake contract with Jinchuan, China's largest nickel producer, for up to 25,000 tonnes of nickel in concentrate from its flagship Forrestania project in Western Australia's south, from early next year to December 2011.
"The two-year contract with Jinchuan is consistent with Western Areas' plan to sell concentrate to major smelters within and outside Australia," Western Areas managing director Julian Hanna said.
"We expect the agreement with China's largest nickel company will also provide Western Areas with exposure to one of the world's fastest growing markets."
Western Areas expects to double production from an estimated 10,000 tonnes this year to 20,000 tonnes in 2010. It is targeting a production rate of 25,000 tonnes a year from 2011.
Under an offtake agreement reached in March, the first 10,000 tonnes a year from the project is being sold to BHP, up to a limit of 75,000 tonnes. The mining giant took over from Russia's Norilsk Nickel as Western Areas' main customer.
Nickel concentrate from the miner's first underground mine at Forrestania, Flying Fox, is processed 300km away at BHP's Kalgoorlie smelter.
Western Areas also said yesterday that final permit processes were under way for an open pit mine at the Spotted Quoll project.
The company's shares fell 23c to $5.35.
