Australian listed miner IGO is understood to be weighing an acquisition of one of Rio Tinto’s assets in Western Australia as it turns its attention to mergers and acquisition opportunities outside the lithium sector.
The Winu Project is a copper-gold deposit in the northern Pilbara region, 320km east of Port Hedland. The greenfield mining project is considered sub-scale for Rio, which has been moving to sell the asset, with South32 also said to be taking a look.
Rio has lodged an application with the WA government to develop the project within both the Nyangumarta people’s and the Martu people’s Native Title Determination Areas.
The proposal is to clear up to 4868ha of native vegetation within a proposed 37,344ha Development Envelope for an open pit that extends below the water table, ore processing facilities, ore and topsoil stockpiles, Waste Rock Landforms, a Tailings Storage Facility, bore field(s) and associated infrastructure.
It follows federal Environment Minister Tanya Plibersek’s controversial decision to declare an Indigenous protection order over Regis Resource’s McPhillamys gold mine development near Blayney, NSW, claiming the move would threaten all future developments including renewable energy, farming and housing.
IGO has been turning its attention back to mergers and acquisitions after it bought Western Areas for $1.25bn then wrote down the value of the nickel miner by $880m to $980m on the back of a collapse in the price of the commodity.
The deal included a 20 per cent stake in fellow WA nickel miner Panoramic Resources, worth about $102m at the time, but Panoramic has since gone into administration.
It refrained from deal making for some time after that.
However, following its strategy day last week, some believe the group needs to turn its attention back to acquisitions with the take-up of electric vehicles likely to be slower than anticipated, dampening short-term demand for lithium, which is used for batteries, from its flagship Greenbushes project.
IGO signalled copper was a focus, but some believe developing copper projects from scratch could be a long and slow journey for IGO, with questions on whether it would not be better off buying the $1.2bn ASX-listed Metals Acquisition, which owns the CSA copper mine in Cobar.
IGO was in exclusive talks to buy the asset when it was up for sale, but then withdrew, allowing underbidder MAC to win the Glencore auction.
However, some believe buying Metals Acquisition would not be IGO’s style, which, run by former Rio Tinto executives, likes top tier, long life and low-priced assets to buy. The CSA mine is underground and complex.
IGO flagged that the lithium market was seeing its acceleration being held back from adoption challenges and would remain volatile for the short term.
Another option is that IGO buys more lithium assets globally in markets such as the US.
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