BHP and Rio Tinto have revealed new offshore plays to get deeper into the renewable commodities sector.
BHP has made a takeover offer for a Canadian nickel company which, if successful, will add to its Nickel West business in Australia and push it deep into one of the most prospective areas in North America.
At the same time Rio has firmed up its big Serbian lithium mine, announcing plans to spend $US2.8 billion ($A3.3 billion) on developing the project as a supply base for the rapidly changing European car sector.
Rio’s announcement came overnight Tuesday and before the company releases what’s expected to be a boomer of an interim result after the ASX closes at 4pm Wednesday.
BHP’s bid for Noront Resources was announced overnight Tuesday in Canada and to the ASX on Wednesday morning and will top a move from Fortescue Metals Chair, Andrew Forrest.
BHP’s cash offer values the company at $C325 million or 55 Canadian cents a share, and would trump a planned rival offer from Forrest’s Wyloo Metals.
Noront’s board agreed to support the BHP bid, which is a 69% premium to Noront’s closing price on Monday and 129% higher than where the shares traded before Wyloo announced plans for its unsolicited bid.
The offer is conditional on acceptance by more than 50% of the Noront shares, excluding a small stake that BHP already owns.
That means Forrest’s Wyloo Metals, which owns about 25% of Noront will be forced to significantly lift its offer or face being locked in if BHP gets to its 50% stake.
BHP has been expanding its nickel and copper businesses as the push towards a renewables future gathers pace. Last week it sealed a nickel supply deal with electric vehicle and battery maker, Tesla and its due to make a decision on a $US6 billion plus first stage of its Jansen potash mine in the next two months.
In May, Rio acquired an 8.8% stake in a Yukon, Canada copper project (for $C25 million), while BHP has been building its stake in a company planning to develop a giant copper/gold mine in Ecuador, as well as maintaining output from its huge copper mines in Chile, Olympic Dam in Australia and the prospective Oak Dam, also in South Australia.
Rio also has its huge low-grade copper/gold project at Winu in the eastern Pilbara that is due to start producing in 2025-26.
The attraction for BHP is Noront’s best asset — the Eagle’s Nest nickel and copper deposit in Canada’s Ring of Fire region in the James Bay lowlands of northern Ontario.
Noront’s website says it has ownership or a controlling interest of all the major discoveries in the Ring of Fire to date, “an emerging multi-metals area located in the James Bay Lowlands of Northern Ontario. The company is developing resources that will be essential to a decarbonized future including, nickel, copper, chrome and platinum.”
“The company’s first project is a 100%-owned, high-grade, nickel, copper and platinum group element (PGE) deposit called Eagle’s Nest. It is the largest high-grade nickel discovery in Canada since Voisey’s Bay and the most advanced project in the Ring of Fire. The next projects in our pipeline are the Blackbird and Black Thor chromite deposits in conjunction with a Ferrochrome Production Facility in Sault Ste. Marie.”
Nickel is a key component in lithium-ion batteries, used in electric vehicles – packing more into batteries and allowing producers to reduce use of cobalt, which is more expensive and at the moment comes from the unstable areas in Central Africa.
America’s major car companies – GM, Ford, Stellantis (Chrysler), Toyota, Nissan have revealed plans to convert to EVs (plug in or hybrid) over the next decade with a total spend of well over $US200 billion in the US, Japan and elsewhere.
Major European car companies like VW, Audi, BMW, Porsche, Mercedes (Daimler), Fiant and Peugeot Citroen and Renault are doing the same with plans to switch to mostly electric power (plug in or hybrid) and build a series of battery plants over the next decade and a bit with a total bill in excess of $US200 billion.
“For BHP, the acquisition of Noront presents a world-class growth option, in a key future-facing commodity,” BHP chief development officer Johan van Jaarsveld said in a statement on Tuesday.
“The highly prospective Eagle’s Nest nickel project provides an excellent platform from which to develop further opportunities in Ontario’s Ring of Fire.”
Rio’s plans to build a lithium mine in Serbia has been two years in the making as the company has grown increasingly confident in the resource and demand.
In its statement, Rio said the Jadar project remains subject to receiving all relevant approvals, permits and licences and ongoing engagement with local communities, the Government of Serbia and civil society.
“The Jadar project would scale up Rio Tinto’s exposure to battery materials, and demonstrate the company’s commitment to investing capital in a disciplined manner to further strengthen its portfolio for the global energy transition.
“Jadar will produce battery-grade lithium carbonate, a critical mineral used in large scale batteries for electric vehicles and storing renewable energy, and position Rio Tinto as the largest source of lithium supply in Europe for at least the next 15 years. In addition, Jadar will produce borates, which are used in solar panels and wind turbines.”
First saleable production is expected in 2026 at a time of strong market fundamentals with lithium demand forecast to grow 25-35% per annum over the next decade.
“Following ramp up to full production in 2029, the mine will produce ~58,000 tonnes of lithium carbonate, 160,000 tonnes of boric acid (B2O3 units) and 255,000 tonnes of sodium sulphate annually, making Rio Tinto one of the top ten lithium producers in the world. Based on this annual production of lithium carbonate, Rio Tinto aims to produce 2.3 million tonnes of lithium carbonate over the expected 40-year life of mine,” Rio said in its statement to the ASX on Wednesday.
