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Western Areas not seeing reduced demand from BHP Billiton's Nickel West

's recent is unlikelyto impact Western Areas Ltd.'sagreement with the global mining giant to supply nickel concentrate to the troubledNickel West operationin Western Australia.

WesternAreas CFO Joseph Belladonna told reporters March 31 following a West AustralianMining Club luncheon that BHP Billiton has given no indication that it plans tocut back on the supply of concentrate to Nickel West.

"Atthe moment, we're not having any pushback on product at all and we're up for off-takein 12 months' time," he said. "We could probably sign that up today ifwe were in that mindset. So we're not seeing any deterioration in demand from ourside."

WesternAreas, the third-largest nickel producer in Australia, currently supplies concentrateto BHP Billiton, which uses the concentrate that is high in iron and low in magnesiumto blend almost 3-to-1 with low-quality concentrate to make it suitable to supplythe smelter in Kalgoorlie, Western Australia.

The contractwith BHP Billiton runs until 2017.

WesternAreas expects to produce between 24,000 tonnes and 25,000 tonnes of nickel concentratefrom its Forrestaniaoperations this financial year. Around 12,000 tonnes will be sold to Nickel Westand the remainder will supply China's JinchuanGroup Co. Ltd.

The formerpresident of BHP Billiton's coal operations, Mike Henry, now has responsibilityfor Nickel West as part of his new job as president of operations for the newlyformed Minerals Australia.

NickelWest has been struggling for some time, particularly following the of the Perseverance mine in late 2013, and BHP Billitonwas forced to drop its plansto sell the asset in late 2014 because it could not attract a reasonable price.

The companyhad initially planned to sellthe operation instead of including it in the South32 Ltd. spinoff,but the key hurdle toselling Nickel West is believed to be environmental liabilities worth up to A$2billion.

Meanwhile,Western Areas' Belladonna is confident the company would not have a problem sellingNickel West's share of off-take if BHP Billiton did decide to drop Western Areasas a supplier.

"Idon't think we'd have any problems selling it to Jinchuan if we did get pushbackfrom BHP in any case," he said.