Trafigura and Korea Zinc Partner to Build Nickel Refinery in South Korea

On Friday, global commodity trader Trafigura announced the signing of a $140 million investment agreement with Korea Zinc to embark on the construction of an all-in-one nickel refinery in Ulsan, South Korea, and provide initial working capital financing.

The forthcoming refinery will possess the capability to process diverse feedstocks, including nickel matte and mixed hydroxide precipitate (MHP), utilizing an integrated pyro-hydro process, as outlined in the official release. Korea Zinc will oversee the establishment of the refinery through its subsidiary, Korea Energy Materials (KEMCO), and, in accordance with the agreement, Trafigura will secure a 12.9% stake in KEMCO.

Furthermore, the collaborative venture involves a long-term agreement to ensure a consistent supply of feedstock for the refinery. As per the terms of the contract, Trafigura commits to supplying nickel in the range of approximately 20,000-40,000 metric tons per annum. Additionally, Trafigura will have an off take right concerning the feedstock contract.

This strategic partnership between Trafigura and Korea Zinc signifies a significant investment in the nickel industry, contributing to the development of a state-of-the-art refinery in South Korea. The integrated pyro-hydro process, capable of handling various feedstocks, underscores the refinery's technological sophistication. Trafigura's substantial investment, alongside its secured stake in KEMCO, positions the company as a key player in the venture.

The long-term agreement for a reliable supply of feedstock is a crucial element of the collaboration, ensuring the consistent operation of the refinery. The specified range of nickel supply by Trafigura, coupled with the off-take right, reflects a commitment to fostering a sustainable and mutually beneficial partnership.

This investment aligns with the broader trends in the commodities market, with companies strategically positioning themselves to meet the growing demand for nickel and associated products. Nickel plays a pivotal role in various industries, particularly in the production of batteries for electric vehicles and renewable energy storage systems. As the world transitions towards cleaner energy sources, the demand for nickel is expected to surge, making investments in refining capacity a strategic move.

The partnership between Trafigura and Korea Zinc not only addresses the immediate need for a reliable supply of nickel but also positions the companies favorably in the evolving landscape of the nickel market. The commitment to a significant stake in KEMCO further solidifies Trafigura's role as a long-term participant in the venture, with a vested interest in its success.

The Trafigura-Korea Zinc collaboration represents a noteworthy development in the nickel industry, combining financial investment, technological innovation, and strategic planning. The construction of the all-in-one nickel refinery in South Korea is poised to contribute to the global supply chain of nickel products, with Trafigura playing a pivotal role in shaping the future of the industry through this strategic partnership.