CHARTS: The coming critical minerals trade war is BRICS short of a load
"While a large number of countries around the world continue to talk about securing raw material supply, China is actually doing something about it."
Australian nickel-lithium miner IGO Ltd said on Tuesday its A$1.1 billion ($829.29 million) takeover of nickel producer Western Areas might fall through after an independent expert concluded the offer was “neither fair nor reasonable”.
The potential collapse of the deal follows an unprecedented surge in nickel prices, as Russia’s invasion of Ukraine hit a massive short bet made by Tsingshan Holding Group, one of the world’s top nickel producers, exacerbating market volatility.
This is also a significant blow to IGO, which has been looking to capitalise on rising demand for raw materials used to make electric vehicle batteries. It had bought a $1.4 billion stake in Tianqi Lithium’s Australian assets in June.
The A$3.36 per share all-cash deal for Western Areas was made in December last year, but IGO said last month that the recent volatility in prices would delay the acquisition.
IGO said on Tuesday it understood that Western Areas’ independent expert concluded its offer was not in the best interests of shareholders, while noting it had neither received nor reviewed the draft report.
IGO also reiterated its earlier stance that its valuation of the deal was based on its long-term view of the nickel market and that its had not materially changed.
It added that while it would assess all options in respect of the deal, it would “remain disciplined” in the deal it pursues.
Shares of IGO fell as much as 3.8% in early trading, their biggest intraday drop since March 15.
Shares of Western Areas were halted pending an announcement related to the deal. The company did not immediately respond to a request for comment.
($1 = 1.3264 Australian dollars)
(By Harish Sridharan; Editing by Sherry Jacob-Phillips and Rashmi Aich)
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