The base of an electric furnace. Credit: Nickel Mines Limited.

Australian firm Nickel Mines has increased its stake in an under-construction 2-line Rotary Kiln Electric Furnace (RKEF) nickel iron plant in Indonesia to 60%.

The acquisition of the additional interest will be implemented through the $70m purchase of a further 35% of the issued and paid-up share capital of Hengjaya Holdings, which owns the RKEF plant.

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The plant is being constructed within Indonesia Morowali Industrial Park (IMIP).

Furthermore, Nickel Mines has a 12-month call option to increase its ownership of the RKEF plant to 100% by making an additional payment of $120m.

The call option period will commence from the date of first nickel pig iron production from the RKEF plant.

“Nickel Mines has a 12-month call option to increase its ownership of the RKEF plant to 100% by making an additional payment of $120m.”

Nickel Mines has an operational and strategic relationship with Chinese stainless-steel producer Tsingshan.

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Under a previously signed collaboration and subscription agreement with Tsingshan subsidiary’s Shanghai Decent, Nickel Mines agreed to build, own and operate processing facilities within IMIP.

The deal also involves the provision of Nickel Mines’ nickel pig iron production as feedstock for Tsingshan’s 3Mtpa stainless-steel facility in the IMIP.

Commissioning of the RKEF plant is expected to take place ahead of schedule in the June 2019 quarter.

Nickel Mines holds an 80% interest in the Hengjaya nickel mine in the Morowali Regency on the east coast of the province of Central Sulawesi, Indonesia.

The mine hosts a JORC 2012 resource of around 37.5 million dry metric tonnes at 1.81% of nickel for the contained metal of around 680,000t.