ORACLE NICKEL PROJECT – 70% INTEREST NICKEL INDUSTRIES
In November 2021 Nickel Industries announced the signing of a further MoU with Shanghai Decent to acquire a 70% interest in the Oracle Nickel Project (‘Oracle Nickel’), a development project currently under construction within the IMIP. This was followed by a Definitive Agreement (‘Agreement’) in December 2021.
The Oracle Nickel project is a joint collaboration with Shanghai Decent, the Company’s largest shareholder, comprising:
- four 54 KVA rotary kiln electric furnace (‘RKEF’) lines with an annual nameplate production capacity of 36,000 tonnes of nickel metal (in nickel pig iron); and
- ancillary facilities required for the operation of each of the RKEF lines.
Oracle Nickel will also separately undertake the construction of a 380MW power plant that will support the Company’s RKEF lines and the IMIP’s overall grid power requirements. The Agreement set out that Nickel Industries would acquire its 70% interest in Oracle Nickel for a total consideration of US$371M (US$530M * 70%), together with the obligation to provide funding to Oracle Nickel of US$154M (US$220M * 70%) for construction of the power plant.
The following payment schedule was agreed.
|Date||Amount (US$M)||Cumulative (US$M)||% of ONI|
|Signing of MoU||10.0||10.0|
|Signing of Definitive Agreement||20.0||30.0|
|By 31 March 2022||23.0||53.0||10%|
|By 30 June 2022||106.0||159.0||30%|
|By 30 September 2022||46.2||205.0|
|By 31 December 2022||212.0||417.2||70%|
|By 31 March 2023||61.6||525.0|
The terms of the Agreement provide for Shanghai Decent to take a lead role in the design and construction of Oracle Nickel with commissioning of the four Oracle RKEF lines to commence no later than 19 February 2023 and the power plant to commence commissioning no later than 19 July 2023 (subject to any force majeure event).
Actual construction costs for the Oracle Nickel Project together with the power plant shall not exceed US$750M, with Shanghai Decent undertaking to indemnify Nickel Industries for any construction costs exceeding US$750M.
The Company’s investment in Oracle Nickel has been undertaken under a replica structure to its Hengjaya Nickel, Ranger Nickel and Angel Nickel investments, with Nickel Industries acquiring its interest in Oracle Nickel through two Singaporean incorporated holding companies that will wholly own an Indonesian incorporated PMA operating company, PT Oracle Nickel Industry (‘PT ONI’), that owns Oracle Nickel’s four RKEF lines and its power plant.
In May 2022, following shareholder approval at an Extraordinary General Meeting of Shareholders, Nickel Industries completed the move to a 30% interest in Oracle Nickel following the issue of 108,122,223 Shares to Shanghai Decent’s nominee, Decent Resource Limited.
Following this in September 2022 the Company acquired an additional 40% interest in Oracle Nickel, taking its interest to 70%, following the payment of US$212M to Decent Resource Limited.
On 15 November 2022 Nickel Industries announced that the first of four RKEF lines at Oracle Nickel had produced its first batch of NPI, well ahead of the scheduled delivery date of February 2023. The second RKEF line commenced operating in mid-December 2022, the third RKEF line in mid-February 2023 and the fourth line in March 2023, which was followed by the commencement of commercial sales of NPI by Oracle Nickel, following PT ONI’s receipt of its Izin Usaha Industri (‘IUI or ‘Industrial Business Licence’).
In January 2023 the Company signed an agreement in which the Company will acquire an additional 10% interest in Oracle Nickel for US$75M, which would take its interest in the project to 80%. This transaction will be subject to shareholder approval to be held at a general meeting of Nickel Industries shareholders.