Australia’s Nickel Mines has signed a binding definitive agreement with its partner Shanghai Decent Investment (Group) to acquire a 70% equity interest in the Oracle Nickel Project in Indonesia.

The $525m deal follows a memorandum of understanding (MoU) signed last month.

As agreed, Nickel Mines will purchase the majority stake in Oracle Nickel for a total consideration of $371m. The company is also obligated to invest $154m for the construction of the project through shareholder loans.

The project will feature four rotary kiln electric furnace (RKEF) lines and ancillary facilities within the Indonesia Morowali Industrial Park (IMIP ) in Central Sulawesi.

The RKEF lines will have a nameplate production capacity of 36,000tpa of equivalent contained nickel in nickel pig iron.

Separately, the project will build a 380MW captive power plant to support RKEF operations.

Shanghai Decent will lead the design and construction of Oracle Nickel.

The four Oracle RKEF lines are expected to commence operations no later than 19 February 2023 while the power plant will be commissioned no later than 19 July 2023.

According to Nickel Mines, the overall construction costs for the project, including the power plant, will not exceed $750m. Shanghai Decent will indemnify Nickel Mines for any construction costs exceeding $750m.

Nickel Mines managing director Justin Werner said: “With our commitment to the Oracle Nickel Project coming rapidly on the heels of the fast-tracked commissioning of our 80%-owned Angel Nickel Project, Nickel Mines is set to more than triple the size of its attributable nickel production and operational cash flows over the next 15 months.

“With 12 RKEF lines in operation by Q1 2023 and approximately 100kt of attributable nickel production, Nickel Mines will sit comfortably amongst the top-ten global producers and be arguably the largest listed pureplay nickel exposure globally.”

The transaction is expected to close following a shareholder approval, which is expected to be sought during a general meeting in the first quarter of 2022.