Glencore, carmakers lead $1bn acquisition of Appian nickel-copper mines in Brazil
Private equity firm Appian Capital Advisory is selling its wholly owned Atlantic Nickel and Mineração Vale Verde operations in Brazil to ACG Acquisition Company Limited (LON: ACG) for $1 billion cash, with capital coming from battery metals hungry actors, including Glencore (LON: GLEN) and Volkswagen.
The deal includes the sale of Appian’s gold royalty on Mineração Vale Verde (MVV) to ACG for further $65 million.
The companies said the transaction will position ACG as the only London-listed nickel sulphide producer of scale. The firm has entered into long-term investment partnerships with Glencore, PowerCo (Volkswagen’s in-house battery development subsidiary) and Stellantis (owner of Fiat and Peugeot), for offtake and funding.
Glencore will invest $100 million in ACG equity. Stellantis and mining investment fund La Mancha will each provide an equity investment of the same amount, while PowerCo will make a $100 million nickel prepayment.
Upon closing, ACG will be renamed ACG Electric Metals and issue new shares, making Glencore, Stellantis and La Mancha owners of 51% and leaving 49% for free float.
Appian put the two operations up for sale in 2021, which were initially snatched by Sibanye-Stillwater (JSE: SSW) (NYSE: SBSW). The South African miner backed out of the multi-million deal a few months later, citing a “geotechnical event” at the Santa Rita mine in north-eastern Brazil.
The British investment firm said at the time the instability quoted by Sibanye was a “localized” crack in the mine’s pit wall, which had been fixed and would have no impact on the open-pit mine’s life.
Appian began legal proceedings against Sibanye in a in a $1.2 billion claim, According to the South African miner’s financial reports, a trial is set to begin in June 2024.
Appian acquired Atlantic Nickel, owner of the Santa Rita open pit nickel mine, in the Brazilian state of in Bahia, in 2018. The same year Appian also purchased MVV, owner of the Serrote greenfield open-pit copper-gold asset located in Brazil northeastern state of Alagoas.
Open-pit operations at Santa Rita resumed in 2020 and are expected to last until 2028, with annual production estimated at 16,000 tonnes nickel-equivalent a year. Santa Rita will then be transitioned into an underground mining operation, extending the life of the mine from eight to 34 years.
Appian recently updated the definitive feasibility study for Serrote project, which outlines a 14-year mine life with production of about 20,000 tonnes of copper equivalent a year.
Russian ties
ACG, a special purpose acquisition company (SPAC), raised $125 million in a London initial public offering in late 2022 to target “new economy” metal assets.
The company is led by Russian metal industry veteran Artem Volynets as chief executive officer. He worked previously in companies backed by Russian tycoons Viktor Vekselberg and Oleg Deripaska and held the position of head of strategy at Deripaska’s United Co. Rusal, one of the world’s largest aluminum producers.
Volynets later served as CEO of Rusal’s parent company, En+ Group and, more recently, he led Chaarat Gold (LON:CGH), which has gold mines in Kyrgyzstan and Armenia.
Shortages of copper, cobalt, nickel and other industrial materials needed for the shift to a low carbon world are expected, due to both underinvestment in the mining sector and accelerating demand of those metals.
SPACs are shell companies that raise money via an initial public offering (IPO) and later merge with a private company, taking it public.
Only a few such deals have taken place in mining, including Vision Blue Resources, a fund created by former Xstrata boss Mick Davis backing a $300 million SPAC, and Metals Acquisition Corp (NYSE: MTAL), which listed in New York and recently bought Glencore’s CSA copper mine in New South Wales, Australia.
