Amid a dramatic change in nickel market conditions over the past few months, Australia’s Centaurus Metals has deferred plans for a nickel sulphate refinery in Brazil and will instead focus on a concentrate-only project for now.

The board has decided to reshape the current feasibility study, postponing parts of the study relating to a fully integrated downstream nickel sulphate project and focusing instead on completing the study based on an initial project only. This approach will significantly lower capital costs and will ensure the Jaguar project remains robust.

Centaurus notes that investor sentiment towards ASX-listed nickel companies has significantly declined and that this has had an impact on market capitalisations and funding options.

“The changes we have seen in the nickel space in recent months cannot be underestimated,” said MD Darren Gordon on Friday.

“While we think nickel prices have overshot on the downside and could rebound much quicker than some market forecasts suggest with supply growth now slowing significantly, we also want to be prudent and preserve maximum value and optionality for our shareholders while delivering an attractive, lower capital cost development route at Jaguar, which demonstrates the quality of the project throughout the commodity price cycle.”

As a result of increasing supply from Indonesia with a corresponding change in underlying supply and demand dynamics, the LME nickel price has fallen by more than 36% over the past year, from around $25 000/t to recent lows below $16 000/t, forcing a number of mine closures globally in high-cost environments including in Australia and eliminating the premium that was previously available for nickel sulphate production.

Centaurus will then be able to complete the necessary financial modelling and estimates that it will be able to release the concentrate feasibility study by the end of June 2024.

The company says the concentrate study is expected to show robust economics underpinned by low operating costs which are globally competitive, including with Indonesian nickel supply, in large part owing to the clean, low-cost power that is available to the project from the 230 kV national grid in Brazil.

“When we see the exceptional work being done by Ero Copper on its four-million-tonne-a-year copper concentrator at Tucumã, just 40 km from Jaguar, we have a lot of confidence in what we should be able to deliver from a similar-sized concentrator at Jaguar,” said Gordon.

Concurrent with the concentrate feasibility study work being completed, Centaurus will continue with its strategic partnering process, supported by Standard Chartered Bank, to evaluate partnering and funding options for the revised project.

“We remain convinced that Jaguar, which hosts resources of nearly one-million tonnes of contained nickel, is one of the top-three nickel sulphide development projects globally, which we anticipate will become an increasingly important source of low carbon nickel supply, particularly for the Western electric vehicle battery industry.”