First Quantum Minerals has agreed to divest its 30% stake in the Ravensthorpe Nickel Operation in Western Australia to steel producer POSCO for $240m.

Upon completion of the deal, First Quantum will continue to serve as the operator with the remaining 70% stake in the Ravensthorpe open-pit nickel and cobalt operation.

The deal will also see POSCO receiving 7,500tpa of nickel in mixed nickel-cobalt hydroxide precipitate (MHP) at Ravensthorpe as part of a long-term offtake agreement. This will be effective from 2024.

In a press statement, First Quantum said: “The proceeds of the transaction will be applied to the outstanding amount on the company’s revolving credit facility, continuing the company’s debt reduction.”

Planned to be closed in the third quarter of 2021, the deal currently awaits the approval of the Australian Foreign Investment Review Board (FIRB).

POSCO and First Quantum have also agreed to assess a strategic partnership to produce battery precursor materials from production at the Ravensthorpe mine.

First Quantum said that it would work with POSCO in the coming months to advance this potential partnership.

First Quantum chairman and CEO said Philip Pascall said: “Our respective organisations have complementary skillsets, which will allow us to maximise the strategic value of Ravensthorpe as a key long-term supplier of nickel to the EV battery sector.

“We look forward to working closely with POSCO at Ravensthorpe and exploring options to broaden our relationship.”

Located in the Esperance region, approximately 550km south-east of Perth, the Ravensthorpe operations include an open-pit mine and primary processing plant.