Mining multinational Anglo American recently agreed to sell its nickel business to a subsidiary of MMG Resources, which has its main offices in Beijing and Melbourne, for up to $500 million. The move left many industry insiders speculating how it might relate to current nickel prices and how it might affect them.
On February 18, the London-headquartered group stated that MMG Singapore agreed to acquire Barro Alto and Codemin ferronickel operations as well as the Jacaré and Morro Sem Boné greenfield growth projects. The transaction stipulates a $350 million cash payment at completion, the potential for up to $100 million in a price-linked earn-out and a contingent cash consideration of $50 million linked to the Final Investment Decision for the development projects.
The company noted that the two parties expect to complete the upfront cash transaction by Q3, contingent on competition and regulatory clearances. Meanwhile, Anglo American quoted its chief executive Duncan Wanblad as saying, “Today’s agreement, together with those signed in November 2024 to sell our steelmaking coal business, is expected to generate a total of up to $5.3 billion of gross cash proceeds.”
The firm also indicated that supply from the assets will have application in the stainless steel and battery sectors.
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Details of the Billion-Dollar Deal
Data from Anglo American indicates that the Barro Alto mine, Niquelândia mine and the Barro Alto and Codemin ferronickel processing plants produced a total of 39,400 metric tonnes of nickel in 2024. This exceeded the set guideline of 38,000-39,000 metric tonnes. However, this production volume also represents a 2% decline from the 40,000 metric tonnes produced in 2023.
The group also stated that nickel production in Q4 totaled 10,000 metric tonnes, off 10% from the 11,100 metric tonnes seen the previous year, which the firm chalked up to lower planned grades.
As previously stated, the sale also includes the greenfield growth development projects of Jacaré, which has about 300 million metric tonnes of mineral resources, and Morro Sem Boné, which has a total potential mineralization of 65 million metric tonnes.
MMG is listed on the Hong Kong Stock Exchange and produces zinc, copper and lead from operating assets in Australia, the Democratic Republic of Congo, Botswana and Peru.
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Another Major Move for Anglo
Anglo American’s sale of its nickel business follows the November sale of its steelmaking coal business to U.S. company Peabody Energy for $4.9 billion. That sale came after Anglo’s May announcement that it would hive off several assets, including those related to steelmaking coal, platinum, nickel and the De Beers diamond subsidiary. In the statement, the company said it wished to focus more on copper, iron ore and fertilizers.
The planned sale of assets was also intended to ward off a takeover attempt by Australian multinational BHP, which made an offer for Anglo American in April 2024. However, BHP dropped its bid in late May, as Anglo had repeatedly rejected overtures from the Australian company.
Indonesia and Nickel Prices
One industry watcher described the nickel market as “problematic” due to Indonesia’s rising production of the base metal and its lower costs.
“Indonesia’s growth has turned the market on its head. It’s left a lot of the traditional nickel producers in a difficult position,” the source told MetalMiner.
“They’re just not competitive,” the source noted, also adding that Chinese money is backing Indonesia’s nickel growth, and China is also consuming it. That situation has also put the nickel market in excess since 2022.
As far as nickel prices go, the London Metal Exchange’s 3-month price was $15,360 per metric tonne on February 18, down 6.45% from February 19, 2024. Meanwhile, the latest price is down over 40% from February 20, 2023, when it was $26,400.
The short squeeze incident that started on the LME back on March 8, 2022 also continues to impact nickel prices. That incident saw the suspension of trading followed by additional disruptions lasting until March 28.
MMG Optimistic About Nickel
In its presentation, MMG said that it actually expected nickel to once again enter a deficit.
“The stainless steel industry is expected to underpin steady demand growth for NPI and FeNi, while nickel demand from the electric vehicle industries is projected to rise exponentially in the coming years,” the firm said in its February 18 presentation. “This expected demand growth, together with resource depletion at existing assets, is expected to result in a deficit in the nickel market post-2030.”
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