Andrew Forrest’s Wyloo Metals ups the ante in fight for control of Noront Resources
Andrew Forrest’s Wyloo Metals has upped the ante in its bidding war with BHP over Canadian nickel explorer Noront Resources.
The boss of Andrew Forrest’s base metals investment company says he wants to see West Australian nickel producers consolidate to form a champion to help WA “get its mojo back as the world’s best nickel producer”.
Speaking after Dr Forrest moved on Monday to trump BHP’s $350m bid for Canadian nickel explorer Noront Resources, Wyloo Metals boss Luca Giacovazzi told The Australian that WA’s smaller producers were constrained by scale, or by limited mine life.
“There’s an issue with every single one of them. If they all just came around and came together, they’d fit together like a jigsaw because their production profiles cancel out their issues and they would have a long enough life to stand up on their own,” he said.
“We took these positions because we want exposure to nickel. We think there’s a long way to go in nickel and I think ideally we’d like to see a Western Australian nickel champion emerge at some point, because the region warrants it and the deposits warrant it.”
Dr Forrest and Wyloo have quietly built stakes in a raft of WA nickel producers and late stage hopefuls over the last few years.
Amid ongoing merger talks between Western Areas and IGO, Wyloo owns about 15 per cent of Mincor Resources – which is building a new nickel mine and is said to have been involved in merger talks with Western Areas earlier this year.
It emerged as a substantial 5.3 per cent holder in Western Areas shares after news of takeover talks with IGO went public, and also holds 12 per cent of Poseidon Nickel stock and just under 5 per cent of nickel producer Panoramic Resources.
Mr Giacovazzi shied away from a suggestion that Wyloo was positioning itself as the kingmaker in a consolidation of the WA nickel sector, but said that the industry should look to the example set by the state’s gold miners and combine to form a company with global significance.
WA mines produced only about 6 per cent of global nickel supply in 2020, but the state is one of the few reliable sources of sulphide ores, seen as the best option to produce high purity nickel needed to service the battery market.
The state produced about 150,000 tonnes of nickel in the 2019 to 2020 financial year, with more than half of that coming from BHP’s Nickel West operations. The rest came from a scattered group of producers, including IGO, Western Areas, and Glencore’s Murrin Murrin operations.
Mr Giacovazzi would not be drawn on whether Wyloo saw itself as the eventual owner of a WA consolidation play, but said the industry as a whole would benefit from a roll-up of the state’s scattered producers.
“Individually they’re all okay. But I think if they took the time to think bigger they could be much more,” he said.
“In Western Australia the gold guys managed to do it, they put egos aside and they’ve created companies that stand up at global scale, and on the global stage. The nickel guys need to be thinking bigger than what they currently are.”
Mr Giacovazzi’s comments came after Wyloo Metals upped the ante in its bidding war with BHP over Canadian nickel explorer Noront Resources, throwing an extra C15c (16.3c) a share on the table for Noront Holders.
Wyloo topped BHP’s C55c a share offer for Noront on Monday night by 27 per cent, offering C70c a share for the Canadian nickel play and offering the company’s shareholders the option for it to remain a publicly listed company rather than being swallowed up by Dr Forrest’s privately-owned mining group.
The offer comes after Fortescue Metals Group declared a $2.11 a share dividend on Monday, which will deliver a fresh $2.39bn cheque to Dr Forrest’s Tattarang group of companies and charities.
In July Noront’s board agreed to a friendly $C325m ($350m) takeover by BHP, after the global mining giant topped Wyloo’s earlier C35c bid for the company, hoping to entice Dr Forrest to sell Wyloo’s stake.
But Wyloo boss Luca Giacovazzi said the company had no intention of giving up its position in Noront, and its extensive land holding in one of Canada’s most prospective nickel districts.
BHP noted on Tuesday that Wyloo had only issued a “press release” in regard to its improved offer, and had not yet formalised a fresh bid to the Noront board.
“It’s important to note that Wyloo has only made a proposal, which is subject to conditions, and has not entered into any binding agreement with Noront in respect of a transaction or a formal offer. The BHP offer is the only offer that has been made to shareholders,” said a spokesman.
Mr Giacovazzi said Wyloo’s offer would also allow Noront shareholders to decide if they wanted to keep their stake in the company, rather than having it subsumed into BHP.
He said Wyloo wanted Noront to remain as a listed company and was “pretty indifferent” to whether existing holders wanted to sell or retain their shares in the explorer.
Dr Forrest’s fierce rivalry with BHP dates back to his efforts to get WA’s major iron ore producers to drop tenements to allow explorers to enter the market in the early 2000s, and reached fever pitch as Fortescue fought for a foothold in the port and rail infrastructure needed to become an iron ore exporter.
If Wyloo plays any role in the consolidation of the WA nickel sector, that rivalry with is likely to continue, with Mr Giacovazzi noting that the mining major was still reliant on WA’s nickel juniors to feed its Kalgoorlie nickel smelter.
“When BHP had the (Kambalda nickel) concentrator, everyone needed BHP. The tables are now turned – if these guys come together, all of a sudden BHP need them or they‘ve got a big problem with the smelter,” he said.
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