BHP Group has opted to sell its interest in the $2.5bn Kabanga nickel project in Tanzania to its partner Lifezone Metals for as much as $83m, Lifezone said.
Image credit: Reuters
The NYSE-listed company will acquire BHP's 17% equity interest in Kabanga Nickel Limited (KNL), the majority owner of the Kabanga Nickel Project in northwestern Tanzania, Lifezone said in a filing.
The company issued a report on Friday that put development costs for the project at $2.49bn.
It is expected to produce around 50,000 metric tonnes of nickel annually once fully ramped up, a process that will take six years, including construction. A final investment decision on the project is due next year.
BHP had agreed in 2022 to invest as much as $100m in the nickel mine and processing facilities if certain conditions were met.
BHP still considers Kabanga to be one of the world's best undeveloped nickel sulphide projects, said a source with knowledge of the matter, but the uncertain nickel market outlook and the miner's capital allocation framework have made investments in greenfield nickel projects challenging.
A BHP spokesperson declined to comment.
BHP has shifted its view on nickel on the back of a boom in output from Indonesia in recent years. It put its Australian Nickel West operations on care and maintenance last year due to a poor outlook for nickel prices, and a decision on the future of those operations is due by early 2027.
As a result of the transaction, Lifezone now owns 100% of KNL, which in turn holds an 84% interest in Tembo Nickel Corporation Limited (TNCL), the Tanzanian operating company for the Kabanga Nickel Project.
The remaining 16% of TNCL is held by Tanzania's government.
All existing agreements with BHP have been terminated and Lifezone has also assumed full control of 100% of the offtake from the Kabanga Nickel Project, it said.
