Anglo American agrees $525mn deal for Sirius Minerals
Anglo American has agreed to buy Sirius Minerals for $525mn marking the global miner’s return to fertiliser and throwing a lifeline to the struggling UK potash project.
Sirius shareholders will receive 5.50 pence per share in cash, a 34.1% premium to the closing price on January 7, which was the day before Anglo American said it was in talks to buy the fertilizer company. Shares of Sirius Minerals were 1.9% higher, while Anglo shares up 0.4% in the early trading, reports Reuters.
Sirius has been battling to get bank financing to complete its North Yorkshire polyhalite mine, Britain’s biggest mining project, since it began fundraising with retail investors in 2017. It embarked on a review after scrapping a plan to raise $500 million in a bond sale.
“We now face a stark choice. If the acquisition is not approved by shareholders and does not complete there is a high probability that the business could be placed into administration or liquidation within weeks thereafter,” Sirius Chairman Russell Scrimshaw said.
The potential deal is also expected to save hundreds of jobs in northern England, where the lack of opportunities was an issue in the general election that returned Prime Minister Boris Johnson’s government to power.
Scrimshaw said if the deal falls apart it would most likely result in shareholders losing all of their investments putting the future of the entire project and its associated benefits for the UK, at risk.
The acquisition will also see Anglo American expanding its portfolio back into fertilisers after it sold its remaining fertilizer project in Brazil in 2016 when it was recovering from a commodity market crash.
Commenting on the Acquisition, Mark Cutifani, Chief Executive of Anglo American, said: “Anglo American’s recommended offer provides greater certainty for Sirius’ Shareholders, employees and wider stakeholders, while bringing the prospects for the development of this potential Tier 1 Project closer to reality. We intend to bring Anglo American’s financial, technical and product marketing resources and capabilities to the development of the Project, which of course would be expected to unlock a significant and sustained associated employment and economic stimulus for the local area.
“The addition of the Project supports our ongoing transition towards supplying those essential metals and minerals that will meet the world’s evolving needs – in terms of the undoubted need for cleaner energy and transport, and providing infrastructure and food for the world’s fast-growing and urbanising population. Our development of the Project in the years ahead reinforces the quality of our portfolio and our long-term growth profile, further enhancing our ability to deliver leading returns on a sustainable basis and enduring value for all stakeholders.”
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.