Andrew Forrest is Australia’s richest man, but no one recognized him when he went into the Nickel Bar of the Kambalda Hotel.
It was a quiet Wednesday night, with a few locals drinking at the Swinging Arms. It got its moniker from the numerous punches thrown throughout the years at what is possibly Western Australia’s roughest and fiercest pub.
Publican Steve Cole was not on duty when he received a call from one of his employees reporting that “someone famous” had called in for a beer, AFR reported.
Because of his white shirt and cream jacket, and his modest entourage, Forrest stood out. Cole, a former Fortescue Metals Group employee, immediately recognized him when he arrived on the scene.
That was in May, when Forrest’s privately held Wyloo Metals moved closer to a $760 million buyout of nickel producer Mincor Resources, which was completed this week.
He spent the night in Mincor’s Cassini mine’s accomodation village, where he shared his vision for the company to serve as a springboard for even greater goals to promote nickel as a critical battery ingredient.
The next day, he was underground for the first time in 15 years, when he boarded a drilling behemoth and received a crash course in an operator’s profession that pays about $180,000 per year, according to Seek.
Forrest went to both the new Cassini mine and the old Long mine, collecting “money rocks” and seeking for green flecks that indicate high-grade nickel sulphide.
For the second time in his professional career, Forrest is betting big on nickel and has stated that he is willing to invest whatever it takes to become a globally significant supplier to battery and automobile makers.
The move comes 22 years after the Anaconda Nickel disaster nearly broke him, and more than 55 years after nickel put Kambalda, approximately 600 kilometers east of Perth, on the map.
Cole, who acquired the Kambalda bar a few years ago and is president of the local footy club, believes the town is poised for a fresh boom in these changing times, which are defined by the resurgence of nickel and the rise of lithium.
The Mincor ground beneath the Kambalda and Widgiemooltha nickel domes is next to Essential Metals’ Pioneer Dome lithium property, and lithium has been discovered in Mincor drill cores.
Within 100 kilometers of Pioneer Dome are the Mt Marion lithium mine, owned by Chris Ellison’s Mineral Resources and China’s Ganfeng, the Bald Hill lithium mine, and Liontown’s Buldania lithium project.
And there’s still life in gold discovered around Kambalda back in the 1890s.
No more punching on
Cole says that all stacks up well for Kambalda and his pub, built four years after Western Mining Corporation started mining nickel in the region in 1966.
“From 1970 to the time I bought it, it was very well known as the Swinging Arms,” Cole says.
“I’ve got a zero tolerance to violence, and I’ve changed the name from the Kambalda Hotel/Swinging Arms to the Kambalda Hotel/Nickel Bar, which reflects Kambalda being founded on nickel.
“It had a very chequered past. It wasn’t uncommon to come over here and there’d be 200-300 people punching on back in the heyday. It was a fairly Wild West situation even back in the ’80s and ’90s.”
According to Cole, the hotel’s 33 rooms are completely occupied by mining corporations and explorers. He’s about to construct 22 rooms and will most likely appeal to the local council for permission to create roughly 300 more rooms with the help of a mining business.
“This mineral boom hasn’t really taken off yet. We’ve got another level of boom times here,” he says.
“With the way the world’s going, you don’t have to be Einstein to realise that lithium and nickel are the way of the future. You’ve got to have nickel and lithium for batteries, and we’re sitting on probably one of the biggest [nickel] deposits in the world here, so it’s only a matter of time.”
Wyloo began investing in Mincor in 2019 when it was a $40 million firm, seeing it as a vehicle to reassemble the Kambalda nickel precinct, which Western Mining had divided up in the 1990s to help pay for Olympic Dam.
Wyloo was added to the registry at the same time that Mincor purchased the Long mine from IGO Limited in 2019.
The same year, BHP decided to keep its Nickel West operation since it gave exposure to the battery boom. The announcement followed a BHP analysis of battery minerals, in which nickel came out ahead of lithium and cobalt.
BHP, Mincor/Wyloo and IGO are now all intertwined in nickel.
Mincor and IGO, which in a disputed 2022 transaction acquired another nickel producer in Western Areas for $1.3 billion, are important suppliers to BHP. Mincor’s offtake agreement with BHP is slated to end in 2025, and Wyloo, as the new owner, will be responsible for resolving quality issues linked to arsenic content in Cassini ore that have received a red signal from BHP.
Wyloo and IGO are considering building a processing plant in Kwinana, south of Perth, to mix nickel, cobalt, and manganese to make pCAM, a precursor material for battery cathodes. The partnership arose from the Western Areas takeover, in which Forrest had leverage via a 9.8 percent stake.
The plant would be the first of its sort in Australia, bringing the country one step closer to producing batteries on its own soil. It is planned at a location near where IGO and China’s Tianqi make lithium hydroxide, as well as near where Wesfarmers and its partner, SQM, have begun construction on their lithium hydroxide factory.
A Wyloo-IGO precursor factory would have ramifications for BHP, which emphasizes nickel in advertising about its entry into “future facing” commodities, as it plans a large-scale refurbishment of its ageing smelter in Kalgoorlie and considering developing a 1000-bed housing community.
A greener way
The Mincor activities rely on the BHP-owned Kambalda nickel concentrator, however nickel smelting is not required as part of the Wyloo-IGO process to produce precursor material.
BHP has its own nickel mines in Kambalda and acquired the $1.7 billion West Musgrave project near the South Australian border as part of its acquisition of OZ Minerals.
According to Wyloo CEO Luca Giacovazzi, producing pCAM at Kwinana makes a lot more sense than moving nickel concentrate (around 12% metal) or nickel sulphate (20% metal).
“It is a great product to move around because it is 100 per cent pure in terms of nickel units, and you bypass smelting as a greener way of making a nickel product,” he says.
“We think the optimal point [in the battery supply chain] today is pCAM, but it’s great to think WA has all the metals needed so we can go further downstream.
“First you have to bridge the gap and be the first to take the step [into pCAM] that opens up a world of possibilities.”
Meanwhile, traders are begging with Giacovazzi not to continue downstream and to allow them to price nickel concentrate produced by Wyloo through Mincor facilities and maybe mines in Canada.
“Traders are in the best position to see where the shortages are, and it is very apparent that the world is short nickel sulphide concentrate,” he says.
Lithium-ion batteries containing nickel, manganese, and cobalt were installed in over 60% of electric vehicles sold worldwide in 2022, and it is widely believed that they store more energy and provide a longer range than competing cathode chemistries.
Every company is coming to us asking if they can do an offtake deal.
— Luca Giacovazzi, Wyloo Metals
“Not many people appreciate there is more nickel in a battery than there is lithium. In another world, it would be called a nickel-ion battery, not a lithium-ion battery,” says Giacovazzi.
One big difference is that lithium production started from near zero when demand for EVs started to accelerate whereas nickel could be appropriated from long-established stainless steel supply chains.
“When you think about the world, there is a lot of lithium out there. Every second day someone has found or made some lithium,” says Giacovazzi.
“When you think about nickel, how many times in your day job do you hear of people making high-grade nickel discoveries? They are few and far between.
“It feels like at some point nickel will have its lithium moment when there is just not enough of it. We get to see it first-hand because we talk to car companies a lot. Every company is coming to us asking if they can do an offtake deal.
“The OEMs [original equipment manufacturers] think they have dealt with the issues in lithium and are now turning their attention to nickel. They are looking at the nickel universe and going, ‘my options are BHP and Vale’, whose offtake is all gone, and Glencore, whose offtake is all gone, or to Indonesia or to us.”
Wyloo has a position in what it claims to be the world’s three best nickel sulphide belts outside of Russia – Kambalda, the Ring of Fire region in northern Ontario, and the Cape Smith belt in Quebec – as well as a long pipeline of projects that will shortly necessitate significant investments.
In terms of exploration, Wyloo feels that much more nickel, and maybe the major ore deposit, is still to be discovered around Kambalda.
In Ontario, the Eagle’s Nest nickel project, which was won after a bidding war with BHP, is expected to be operational by the end of the decade.
Wyloo also intends to construct a precursor facility in Canada, expand its Blackbird chrome project in the Ring of Fire, and continue exploration activities at Cape Smith.
Giacovazzi expects plenty more to come, but is thrilled that the nickel price has more than doubled since he first pitched a return to the area to Forrest approximately four and a half years ago.
He is astonished that the Albanese government did not include nickel in an updated key minerals list released last month.
“I know it is something the government is looking at very closely, so I don’t think it stays off the list for long,” he says.
Despite all of the Chinese-backed nickel laterite projects cropping up in Indonesia, Forrest says his team has done a lot of study to establish that nickel sulphides are the “greenest and cheapest” road to a battery.
Both the Albanese and Western Australian governments inked crucial minerals deals with Indonesian President Joko Widodo this week, raising suspicions in the Australian nickel sector and the Forrest camp.
Indonesia’s contribution to the key minerals table is limited to nickel laterite projects, which it insists on producing at least pig iron onshore. The projects raise serious environmental concerns and are largely entirely or partially owned by China.
This week, Forrest certainly had Indonesian producers in mind when he promised the world a choice between clean and dirty nickel.
Wyloo estimates that a laterite operation in Indonesia has a carbon footprint six times that of a similar scale sulphide business.
Forrest says he doesn’t want anything to do with tropical laterite activities that involve deforestation and inevitably end up in the water, and predicts that the market will eventually feel the same way.
“People were prepared to turn a blind eye yesterday but tomorrow they may not be,” he says.