The NYSE-listed company will acquire BHP's 17% equity interest in Kabanga Nickel Limited (KNL), the majority owner of the Kabanga Nickel Project in northwestern Tanzania, Lifezone said in a filing late on Friday.

The company issued a report on Friday that put development costs for the project at $2.49 billion. It is expected to produce around 50 000 metric tons of nickel annually once fully ramped up, a process that will take six years including construction. A final investment decision on the project is due next year.

BHP had agreed in 2022 to make an investment of as much as $100 million in the nickel mine and processing facilities if certain conditions were met.

BHP still considers Kabanga to be one of the world's best undeveloped nickel sulphide projects, said a source with knowledge of the matter, but the uncertain nickel market outlook and the miner's capital allocation framework have made investments in greenfield nickel projects challenging.

A BHP Spokesperson declined to comment.

BHP has shifted its view on nickel on the back of a boom in output from Indonesia in recent years. It put its Australian Nickel West operations on care and maintenance last year due to a poor outlook for nickel prices, and a decision on the future of those operations is due by early 2027.

As a result of the transaction, Lifezone now owns 100% of KNL, which in turn holds an 84% interest in Tembo Nickel Corporation Limited (TNCL), the Tanzanian operating company for the Kabanga Nickel Project.

The remaining 16% of TNCL is held by Tanzania's government. All existing agreements with BHP have been terminated and Lifezone has also assumed full control of 100% of the offtake from the Kabanga Nickel Project, it said.

--Reuters--