Glencore, automakers to back US$1 billion nickel, copper SPAC deal in Brazil

Global miner Glencore, Chrysler parent Stellantis and Volkswagen’s battery unit PowerCo have agreed to back a US$1 billion deal by blank-cheque fund ACG Acquisition Company to buy two mines in Brazil, ACG said on Monday (Jun 12).

The deal comes as a mining M&A spree picks up, spurred in part by investors betting on rising demand for metals needed for the global green energy transition in coming years.

ACG, a London-listed special purpose acquisition company (SPAC), will buy the Santa Rita nickel sulphide and Serrote copper mines from private equity funds advised by Appian Capital, which has hired Standard Chartered and Citigroup on the sale, it said in a statement.

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 founded by former Xstrata boss Mick Davis backing a US$300 million SPAC, and Metals Acquisition Corp, which listed in New York and bought a copper mine owned by Glencore.

Post purchase, the nickel concentrate will be refined at Glencore’s facilities in Western Europe and North America, the statement said, with the final product incorporated into electric vehicle (EV) batteries by Stellantis, PowerCo and other manufacturers.

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Glencore will invest US$100 million in ACG equity. Stellantis and mining investment fund La Mancha Resource Capital will each provide an equity investment of the same amount, while PowerCo will make a US$100 million nickel prepayment.

“PowerCo thus secures the ramp-up of cell production at competitive prices,” Volkswagen told Reuters.

During the process, ACG will become ACG Electric Metals and issue new shares, making Glencore, Stellantis and La Mancha owners of 51 per cent and leaving 49 per cent for free float, Artem Volynets, ACG chief executive, told Reuters.

Both mines use hydropower for production and are considering expansions.

A year ago, Appian began legal proceedings in a US$1.2-billion claim against South Africa’s Sibanye-Stillwater after Sibanye pulled out of a deal to acquire the same two mines, citing a “geotechnical event” at Santa Rita.

Appian said Sibanye’s decision to withdraw from the deal was based on an “incorrect assertion”. Sibanye filed its defence and, according to its financial report, expects a trial to begin in June 2024.

ACG has full confidence in the mines.

The deal “will establish ACG Electric Metals as a premier supplier of critical metals into the western EV value chain,” Volynets said.

Volynets is the former boss of En+ Group and led the Hong Kong IPO of subsidiary aluminium producer Rusal in 2010. He also led the merger of two Russian aluminium producers with Glencore’s alumina assets in 2000s. REUTERS