Glencore, automobile firm Stellantis and Volkswagen’s battery company PowerCo have entered a US$1bn deal to fund ACG Acquisition Company to buy two mines in Brazil.
ACG is a London-listed special purpose acquisition company (SPAC) that will buy Santa Rita nickel sulphide and Serrote copper mines from private equity funds advised by Appian Capital.
Glencore will invest US$100mln into the SPAC, with Stellantis and mining investment fund La Mancha Resource Capital providing an equity investment of the same amount.
PowerCo will make a US$100mln nickel prepayment as part of the deal.
ACG will become ACG Electric Metals and issue new shares, with Glencore, Stellantis and La Mancha becoming 51% owners, leaving 49% for free float, according to Reuters.
The nickel concentrate will be refined at Glencore’s facilities in Western Europe and North America, with the final product incorporated into electric vehicle batteries manufactured by Stellantis, PowerCo and other manufacturers.
The deal comes as demand for battery metals continues to rise, spurred on by the global green energy transition.
"The transaction highlights the importance of the EV commodities supply chain to western automotive OEMs,” said Jon Perry, partner at law firm Norton Rose which advised Appian Capital on the deal.
The SPAC is like some of the arrangements in place with small-cap miners, whereby the metal is refined by the miner and packaged as a product before being sold directly to the end customer.
For example, Tirupati Graphite refines its graphite in Madagascar and sells it as fire-retardant to the Indian railways.