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Volkswagen, Stellantis, and Glencore Support $1 Billion Nickel and Copper SPAC Deal in Brazil

June 14, 2023
339

Glencore plc | Volkswagen AG | Stellantis N.V.

LON: GLEN | ETR: VOW3 | BIT: STLAM
by James Hyland, MiningIR
  • London-listed SPAC company ACG will buy the Santa Rita nickel sulphide and Serrote copper mines in Brazil from private equity funds

ACG Acquisition Company Limited (“ACG”), a special purpose acquisition company (SPAC) listed in London, has secured the support of global miner Glencore, Chrysler parent Stellantis, and Volkswagen Group’s battery unit PowerCo for a $1 billion deal. The agreement involves the acquisition of two mines in Brazil and is backed by these industry giants, reflecting the increasing interest in mining mergers and acquisitions due to the growing demand for metals essential for the global green energy transition.

Artem Volynets, CEO of ACG, stated “We are very proud to announce this transaction in strategic partnership with Glencore, Stellantis, La Mancha, PowerCo and Royal Gold, as well as senior debt providers Citigroup, ING and Societe Generale. It will establish ACG Electric Metals as a premier supplier of critical metals into the western EV value chain, with best-in-class ESG characteristics and minimal CO2 emissions.

ACG Electric Metals will be a company designed to take advantage of the opportunities presented by key global trends: the massive increase in demand for battery metals, the polarisation of supply chains, and the need to reduce the world’s total carbon footprint – from the mine to the end-customer.

These high-quality mines will enable ACG’s mission to be the green metals supplier of choice to western EV automakers. This acquisition establishes a solid platform for further growth and long term shareholder value creation.”

Artem Volynets, CEO of ACG

Mr. Volynets established ACG in 2014, as an advisory and investment management firm, through which he worked on a number of cross border transactions in the mining and metals sector in Eurasian emerging markets. These transactions utilized his extensive experience of M&A-led sector consolidation, his local knowledge and networks, and his global industry and investor connections.

ACG maintains complete confidence in the viability of the mines. Volynets is a former executive of En+ Group, was instrumental in overseeing the Hong Kong IPO of subsidiary aluminum producer Rusal in 2010. Additionally, he played a key role in the merger between two Russian aluminum producers and Glencore’s alumina assets in the 2000s.

The Santa Rita nickel sulfide and Serrote copper mines will be purchased from private equity funds advised by Appian Capital, with Standard Chartered and Citigroup overseeing the sale. ACG plans to merge with these mines through the SPAC structure, a mechanism that allows shell companies to raise funds through an initial public offering and subsequently merge with private enterprises, thereby taking them public.

Although mining SPAC deals are relatively rare, a few notable ones have taken place, such as Vision Blue Resources, founded by former Xstrata CEO Mick Davis, which supported a $300 million SPAC, and Metals Acquisition, a New York-listed entity that acquired a copper mine from Glencore.

After the completion of the acquisition, Glencore will refine the nickel concentrate at its facilities in Western Europe and North America. The refined product will then be used in the production of electric-vehicle batteries by Stellantis, PowerCo, and other manufacturers.

As part of the agreement, Glencore will invest $100 million in ACG equity, while Stellantis and mining investment fund La Mancha Resource Capital will each provide an equal investment amount. PowerCo will make a $100 million nickel prepayment. ACG will undergo a transformation into ACG Electric Metals, issuing new shares and resulting in Glencore, Stellantis, and La Mancha collectively owning a 51 percent stake, with the remaining 49 percent available for public trading. Both mines operate using hydropower and are considering expansion plans.

It is worth noting that a year ago, Appian initiated legal proceedings against South Africa’s Sibanye-Stillwater, seeking a $1.2 billion claim after Sibanye withdrew from a deal to acquire the same two mines, citing a “geotechnical event” at Santa Rita. Appian disputed Sibanye’s reasoning, alleging that it was an incorrect assertion. Sibanye has filed its defense, and a trial is anticipated to commence in June 2024, as stated in its financial report.

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Disclaimer
MiningIR hosts a variety of articles from a range of sources. Our content, while interesting, should not be considered as formal financial advice. Always seek professional guidance and consult a range of sources before investing.
James Hyland, MiningIR
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