The Nickel Industries Ltd (ASX: NIC) share price is falling wayside during trade on Wednesday morning.
This comes after the company announced a long-term strategic cooperation agreement with PT QMB New Energy Materials (QMB).
At the time of writing, the nickel producer's shares are down 1.4% to 88.3 cents.
Nickel Industries secures long-term contract
The dip in the Nickel Industries share price appears to be coming from a broader sell-down across the ASX today. Wall Street recorded losses overnight as the United States Federal Reserve looks all but certain to lift interest rates by 75 basis points tomorrow.
In today's release, Nickel Industries advised that it will supply 5 to 7 million wet metric tonnes per annum of limonite ore to QMB's upcoming concentrator plant.
Subject to necessary approvals, QMB will build the concentrator plant within the Hengjaya Mine area. This will allow ore to flow through a pipeline to its newly commissioned high pressure acid leach (HPAL) plant.
The agreement between the parties will run for 20 years.
In addition, the agreement allows for the exploration of an option for Nickel Industries to take equity participation in the QMB HPAL plant.
If executed, this could see the company produce nickel and cobalt for the growing electric vehicle battery supply chain.
However, discussion on the finer details regarding the long-term agreement must take place. This will include the sale price for limonite ore.
Nickel Industries' managing director, Justin Werner commented:
We are pleased to announce the signing of a long-term strategic cooperation agreement with QMB, a leading global new energy material company. The long-term supply agreement to the QMB HPAL plant highlights the tremendous strategic value of the world-class Hengjaya Mine resources, both limonite and saprolite. It follows our recently updated JORC resource of 3.7 million tonnes of contained nickel metal, which places the Hengjaya Mine among the top 10 nickel resources globally.
Nickel Industries share price snapshot
After reaching an all-time high of US$43,000 per tonne in mid-March, nickel is now fetching US$24,000 per tonne.
Subsequently, this impacted the Nickel Industries share price. It fell to a 52-week low of 84.5 cents on 7 September.
Year to date, the company's shares are down 38.3%.
Nickel Industries has a price-to-earnings (P/E) ratio of 8.97 and commands a market capitalisation of approximately $2.44 billion.
