A Green Premium for Nickel? (Guest Scott Williamson, Blackstone Minerals)

Karl Woll: 00:00:00

Hello, and welcome to Rock Talk, where we explore the world of mining through casual conversations with industry experts. I'm Karl Woll Senior Account Executive at VRIFY Technology. And in this episode, I'm joined by Scott Williamson, Managing director of Blackstone Minerals.

This conversation was originally recorded as a video interview on May 1st and published on YouTube. As there are some visuals that were shared on screen during the interview, I do recommend you watch over on our YouTube channel, if you can. And I'll put a link to that in our show notes. That said if you're listening audio only, no worries.

I've made some slight edits to the audio, so you'll be able to follow along just fine.

In this interview, Scott gives us his background of how he got into the mining sector and his early career. Scott then gives us an overview of the fascinating Ta Khoa project in Vietnam. And we discuss Blackstone Mineral's path towards net zero carbon production and their environmental initiatives. We then discuss if these initiatives may help Blackstone see a green premium in their offtake discussions. As this is a new podcast, I would love any feedback you might have. If you have any suggestions for improvements to the show or guests that would be great to have on, I will link to a feedback form in the show notes, or you can go to our website at rocktalkpod.com. And there's a form on the website. And with that, let's jump into this week's conversation with Scott Williamson.

Scott Williamson: 00:01:27

Scott, thanks for joining.

Karl Woll: 00:01:30

Perfect. Well, today I wanted to cover a bit about the Ta Khoa project and learn about some of the, particularly your ESG initiatives. But before we jump into that, Scott, I just wanted to learn a little bit about you and your background and how it was you got into mining. Was that something you knew you wanted to do from a young age or what was your journey into the industry?

Scott Williamson: 00:01:50

Yeah, so in the early days at school, I was obviously sort of interested in maths and science. So it was always sort of a natural progression into mining engineering. My first preference actually was to go into pharmacy and I didn't get the grades. So luckily I fell into mining because it was my second choice and I did get the grades to get in mining and, and probably, yeah, the grades aren't as, nowhere near as high as they are for pharmacy. So I was lucky that I fell into mining and the good thing with the mining in university is that you very early on, you get exposure to the mining industry.

And so within my first vacation, I was underground and I was getting dirty and just fell in love with it from there. I think it was after my first year in uni, I went straight into an underground mine for three months. Went underground, got my hands dirty and yeah, just fell in love with it from there.

So it was sort of, I was lucky that I didn't get the score to getting into pharmacy.

Karl Woll: 00:02:49

And was that first was that all in Western Australia, like your, your upbringing and those first jobs?

Scott Williamson: 00:02:55

That's right, yeah, so I moved to Perth from up in the north a town called Geraldton, moved down to Perth for university and the later years of high school, and then moved to Kalgoorlie at the West Australian School of Mines for the last few years of my mining engineering degree.

I did a double degree with commerce as well, so I always had an interest in the business side of mining. So I started in the technical side of mining, and then about halfway through my career I moved into more of the business side. And I worked in a company called Hartley's, which is a local stockbroking firm over here in Perth.

So I learned a lot about the financial markets and the, and the money side of mining. So I've got a bit of a experience in technical in those early years in underground mining and also in open pit mining, but then probably the second half of my career is more on the finance side. So I've got a bit of both a blend of both technical and the corporate experience.

Karl Woll: 00:03:53

That's great. And then I guess that brings us to today and your role as Managing Director of Blackstone. Could you give us the elevator pitch or the overview of the Ta Khoa project and where things are at just in general terms?

Scott Williamson: 00:04:05

Yeah, no worries. So we'll we'll step into the VRIFY platform. This is our logistics route in Northern Vietnam. So we're looking to build a vertically integrated mining and refining business. And we're going to produce nickel products for the lithium ion battery. So we're looking to produce a chemical product called a precursor cathode active material.

previously operating between: 2013

And we've been able to bring in the team that operated that mine. So we've got a great team in country. And so we've got a really long history of operating in the Son La region, which is out to the west of Hanoi here. So we'll bring concentrate in from the Haiphong port, and then we'll use the highway system through past Hanoi and then we'll actually change over to the river system and we'll use the river system, to transport concentrates and other imports into the refinery. We'll also use the river system to bring concentrates from the nickel mine in, at the Ta Khoa Nickel Mine down to the refinery.

So, we're very lucky, we've got a belt scale opportunity, there's nickel sulphide everywhere, we've been able to delineate over 100 million tons of nickel. And our total nickel content is around 500,000 tonnes of nickel.

So you can see we're looking to build a large open pit mine at the Banfoot open pit. The open pit will then feed into this 6 million tonne per annum, or 6 to 8 million tonne per annum concentrator.

So we've done a lot of work on the feasibility studies. So you can see here the logistics route, so that river system through to the Ta Khoa Refinery. Refinery is where we'll then take the concentrate from the mine and then we'll convert it into the chemical products for the lithium ion battery.

So this is where we've done a lot of work, where we're at the final stages of our Definitive Feasibility Study for this refinery. So this is a, a high tech nickel process where we're taking the concentrate, we're using pressure oxidation and solvent extraction, and then we're converting it into this chemical product for the lithium ion battery.

Our strategy is not just to bring nickel from the existing nickel mine, but also from third party feed providers.

So we've got a very flexible opportunity where we can bring third party feed in different formats. So we've got mixed hydroxide precipitates, third party concentrates, nickel mat, and we can also look at potentially bringing in black mass, which is the recycled product from the lithium ion battery.

Karl Woll: 00:06:58

Thanks for the overview Scott, One thing I wanted to jump into in our conversation today is just generally looking at the nickel market, which I am by no means an expert in or anything close to it.

chieve net zero production by: 2030

Scott Williamson: 00:08:08

Yeah, no worries. So very early on we realized we had a great opportunity to have one of the lowest carbon footprint nickel products globally. And the reason for that is we've got abundant renewable hydroelectric power in the Son La region. So we've got access to abundant renewable power. And then we're also looking at a fully electric mining fleet as well.

So we've integrated that into our study work. We've done some work with a group called Minviro. We see them as one of the world leaders in life cycle analysis of carbon and so very early on we did this work with Minviro and we've captured not just scope one and two, but also scope three emissions.

Karl Woll: 00:08:50

Can elaborate on what are scope 1, 2, and 3 emissions, Scott?

Scott Williamson: 00:08:53

Yeah, so scope three is the emissions from the products that you're bringing in. So a lot of people don't count those, those emissions that are, that are actually in the products that you're integrating into. So for example, your reagents and all, a lot of the products that you're bringing into your refinery have emissions attached to them.

So a lot of people don't count those. So, and that's, yeah, we think that's a very important. part of your, sustainability strategies to make sure that you are counting those scope three emissions. So you can see here our results we've got 9.8 kilograms of CO2 per kilogram of pCAM.

So that's the precursor cathode active material, which includes not just nickel, but also cobalt, manganese in a ratio of 8:1:1. We're not happy with that. We think we can go much lower. Where we think we can get to as close to net zero as possible from day one. The two main initiatives that I'll focus on is this 2.4 which is the renewable power. So if we can lock in a power purchase agreement directly with the renewable power provider, then we will be able to reduce by 2.4. And then the next one, next big ticket item is the 2.5 here. If we can bring in nickel from another jurisdiction with renewable power, for example, we have an option on the Wobodin Project in Manitoba which is 100 percent hydro power, then we can reduce another 2.5. So we've got a number of initiatives here as you can see to get down to 1.4 and we believe that if we can with some offsets we could probably get down to net zero from day one. So to put that into perspective even at the 9.8, we're still well below our peers in Australia and the nickel industry average and obviously in Indonesia.

So Indonesia, 2 to 6 times the CO2 footprint of our product. Even though we have the lowest CO2 footprint in the industry, we think we can get lower and we will be focused on going to net zero as soon as we can and hopefully from day one. So this is becoming very important from the electric vehicle manufacturers, particularly those premium brands in Europe and North America.

So we are getting feedback that these life cycle analysis are very important to the electric vehicle manufacturers and they will be linked to off take. So we're confident that this type of information will be a big part of those off take discussions and they already are.

So we're already talking about, well, what does this low CO2 footprint mean? Does that mean a green premium for our product? Well, we'll have to see, but I think it won't be long before those green premiums will be seen in those off take discussions results.

Karl Woll: 00:11:37

Green initiatives. We're hoping that it makes the, gives you a competitive advantage in the market and, and commands a green premium on the cost side. Can you take us through the costs of the project?

Scott Williamson: 00:11:47

Yeah, so one of the benefits of having the abundant renewable power is that things like electric mining fleet is actually an NPV positive project. So the benefit of having that low cost power means that these initiatives like electric mining, for example, are actually NPV positive projects so we've got, an opportunity where we've got this low labour costs, we've got very low cost hydro power, we've got some very favourable tax incentives in the early years of the project.

We've got a flow sheet, which we've basically had a blank canvas to produce the most efficient nickel products for the lithium ion battery. And we're confident we will sit in the first quartile cash cost position and beat a lot of our peers in Indonesia. So you can see here through the middle of the cash costs curve is where the Indonesians sit.

We will sit out on the at the first quartile position. So you can see the spot price, which is, this is the lowest that the spot price went to around $16,000 a tonne. So you can see at those levels, the Indonesian nickel was becoming uneconomic. So, and that's why the nickel price is now increased up to about $18,000 per tonne.

So we think around that $20,000 per tonne nickel mark is where it probably starts to level out and we're very happy with any levels around that $20,000 per tonne mark. So we're, we're confident with that abundant renewable power, the low labour cost base, we can beat the Indonesian nickel producers and we will be able to ride through any cycle.

So yeah, well positioned in Vietnam with that renewable power.

Karl Woll: 00:13:30

Yeah, it's really commendable and I love seeing stuff like this because for me, as someone who's new to the mining industry and coming out at the industry with sort of fresh eyes over the last few years you know, mining doesn't always have the best image to people outside the industry. And there's always going to be some sort of footprint or impact to mining, but there's ways we can minimize those as much as possible. And in some cases like this, even offset whatever impact is unavoidable. So I love seeing stuff like this and I really hope there is a way where that green premium comes to fruition.

Because I just think it makes the industry more attractive to other people to that are maybe sort of young people like you, and maybe they didn't get into chemistry school and pharmacy and and they're looking for another opportunity. And those people right now are maybe not looking at at mining. But if there's companies like yours that are really pushing the needle to do things like this, I think it does make it more attractive and helps people get into the industry. So just wanted to commend you on this. I think we're

Scott Williamson: 00:14:27

Thank you.

Karl Woll: 00:14:28

Yeah, no, absolutely.

One last question just to to leave you on, Scott, is for, for people who are new to the industry or, or looking at getting into the industry and want to learn more.

Are there, any go to books, movies, people and any sort of ways to absorb or obtain new knowledge that you would recommend for someone sort of wanting to learn more, whether it's from an investment standpoint or otherwise about getting into the industry?

Scott Williamson: 00:14:52

Yeah, it's a good question. I, I suppose when I took on this role I really had to embrace the social media aspects of the investor relations and very early on in this role, I sort of started spending a lot of time on LinkedIn and Twitter and, and, and following a lot of the, the bigger names like your Rick Rule's and that sort of thing.

Particularly having my background in finance, I, I really I suppose, enjoy watching and listening to the, those financial types. And so yeah, as far as books go I tend not to read too much of mining. I do so much at, at at work. There's always the go to's obviously there's there's the mining valuation handbook and that that's a bit of a staple and that that's really important, particularly in this business part of the industry.

But yeah, there's, there's plenty of good information out there on Twitter and LinkedIn, and I think that's probably where I would, I would go to is, is, try and follow as many people as you can on the social media platforms because there's some really good work being done particularly on LinkedIn, but also on Twitter.

Karl Woll: 00:15:58

Great. Well, thanks again for your time today, Scott. Really appreciate it. Wish you all the best of luck in the, in the rest of 2024. And hopefully I'll see you either Diggers and Dealers or somewhere at a conference this year.

Scott Williamson: 00:16:08

Yeah, thanks, look forward to it.

Karl Woll: 00:16:10

Thanks, Scott. Cheers. ​