Australian nickel and lithium miner IGO (ASX: IGO) is buying rival Western Areas (ASX: WSA) in an all-cash deal valued at A$1.1 billion (about US$793 million), marking what might be the start of a nickel property consolidation pattern in Western Australia.
The A$3.36 a share money splurge will enhance IGO’s nickel enterprise from a short-life, single-asset operation centered round its Nova nickel-copper mine right into a multi-asset division with a long time forward of it.
The transfer would instantly flip IGO into a serious regional participant, boosting the miner’s nickel output from 25,000 to 27,000 tonnes in fiscal 12 months 2022 on a proforma foundation to between 41,000 and 44,000 tonnes.
IGO and Western Areas have been in talks for months, however the twist is the all-cash nature of the deal that can see the client taking over A$900 million in company debt. The corporate mentioned it will additionally use A$272 million from its money reserves to fund the acquisition.
The transaction will give IGO Western Areas’ Forrestania nickel operations, however the largest win is arguably the Odysseus mine, which is scheduled to start manufacturing by the top of 2022.
Odysseus, a part of the large Cosmos nickel operation, is predicted to supply over 10,000 tonnes of nickel a 12 months throughout a ten-year mine life.
“Each Forrestania and Cosmos are high-grade, low-cost nickel sulphide operations and this acquisition, along with our current world class Nova nickel-copper-cobalt operation, will consolidate our place as Australia’s main impartial nickel producer,” GO’s Managing Director and CEO, Peter Bradford, mentioned within the assertion.
The deal follows IGO’s $1.4 billion acquisition of a stake in Tianqi Lithium’s Australian assets a 12 months in the past, as the corporate seems to be to capitalise on rising demand for uncooked supplies used to make electric-vehicle batteries.
Nickel fever
International miners are speeding in to safe an sufficient provide of battery metals forward of an imminent surge in demand for electrical automobiles.
Two main Australian miners, BHP (NYSE: BHP; LSE: BHP; ASX: BHP) and Wyloo Metals, are at present tangled in a bidding war over Noront Sources (TSXV: NOT), which owns the early-stage Eagle’s Nest nickel and copper deposit in northern Ontario’s ‘Ring of Hearth’ area.
Nickel manufacturing might want to improve practically fourfold to satisfy anticipated demand for electrical and hybrid automobiles, the corporate estimates. Likewise, copper output can even must develop exponentially to satisfy demand from renewable energy technology, battery storage, electrical automobiles, charging stations and associated grid infrastructure.
Tesla boss Elon Musk has expressed worries a couple of looming nickel shortage. He pleaded with miners last year to supply extra nickel, promising a “large contract” for provide produced effectively and in an “environmentally delicate approach.”
The U.S. EV large inked in October a multi-year nickel supply deal with New Caledonia’s Prony Sources. The contract ensures it about 42,000 tonnes of the metallic wanted to supply the batteries that energy its EVs.
Tesla additionally has a similar agreement with BHP.
