Outback Way highway big boost for development of $2.9 billion Wingellina nickel-cobalt project

The Outback Way highway sealing project will make a huge difference to the development and operation of the $2.9 billion Wingellina nickel-cobalt project near the WA-Northern Territory-South Australia border, the boss of the company behind the proposal says. The Federal Government this week awarded major project status to Wingellina in the remote northern Goldfields — a resource first discovered in the 1950s, and which has long been in the development pipeline. Work is taking place to seal the 2700km between Laverton in WA and Winton in Queensland to create the Outback Way — and this will help the company behind Wingellina, Nico Resources, when the time comes to transport its product to either the ports of Darwin or Esperance. Nico Resources managing director and chief executive Jonathan Shellabear told the Kalgoorlie Miner the Outback Way would provide it with a sealed road all the way to either Alice Springs or Leonora, where product could be loaded on to trains for transport to port. “We’ve got some land in Alice Springs, and it’s on to the railway line at Alice Springs and up to the port of Darwin, or on to the railway line at Malcolm (east of Leonora) ... and then down to Esperance,” he said. Wingellina hosts one of the world’s largest undeveloped oxide-type nickel-cobalt reserves, which currently stands at 168.4 million tonnes at 0.93 per cent nickel and 0.07 per cent cobalt for 1.56Mt of nickel metal and 123,000 tonnes of cobalt metal It is being developed in the wake of a meltdown in the global nickel industry because of the flood of cheap Chinese-dominated Indonesian product into the market. The situation has already led many Australian operators to cease activities — among them BHP Nickel West, which recently put its facilities, including the Kalgoorlie nickel smelter, into care and maintenance until at least 2027. Mr Shellabear said this “macroeconomic environment” would determine how long it took to bring Wingellina into production. Mr Shellabear said the structural change in the nickel market was “permanent” but Wingellina had the advantage of being an oxide-type resource, which meant it could better compete with the Indonesian producers than its sulphide-based counterparts. This was because its costs were lower than sulphide-based projects, even though capital costs remained higher. “When the conditions are right ... we can compete with the laterite projects in Indonesia,” he said. “Our costs will be higher than their costs, but we’ll certainly be able to compete with them once it’s in production. “If we were operating at the current nickel price, we’d still be generating a free cash flow.” Mr Shellabear said funding the cost of the project would require a strategic partner, with discussions taking place with parties across the globe. “We’ve had discussions with a number of parties over the last 12 or 18 months,” he said. He said there was still plenty of work to be done on Wingellina, with the next major milestone being a definitive feasibility study. Mr Shellabear said Nico Resources had not set a target date on when this study would be completed. “We’re doing a lot of work, which we need to do to facilitate the commencement in earnest of the DFS,” he said. A prefeasibility study completed in December 2022 outlined a project capable of annual production of up to 40,000t of nickel and 3000t of cobalt in a mixed hydroxide precipitate for at least 42 years. Mr Shellabear said the study used a price of $US21,470/t — as compared to the current price of $US15,800/t. “I think everybody’s a little bit shell-shocked about what’s transpired (in the global nickel market),” he said. “But, you know, ultimately the nickel market is still growing at about 5 per cent per annum, and it is underwritten very much by stainless steel. “And then you’ve got the energy transformation under way, with nickel going into batteries. “And that’s obviously expected to increase as we transform energy systems globally. “So the long-term outlook for nickel is rosy, it’s the short term which creates a few headaches for people.” On this basis, Mr Shellabear said he was sure Wingellina would be developed. “There’s no doubt about it,” he said. “It’s just a matter of time. “It’s too big a project, too globally significant, for it to not be but ... we just need to do the work so that we’re in a position where conditions are right and all the pieces of the puzzle are in place to push the button on it.”