IGO to acquire Western Areas in sign of nickel sector consolidation in Australia

Australian battery metals miner IGO has agreed to acquire Western Areas for a fee of around US$793 million, in a deal which will turn it into a major regional player in the nickel space.

ASX-listed IGO and Western Areas had been in talks for months before reaching an A$3.36 a share all-cash deal, which will see IGO assume A$900 million in corporate debt. The company said it would also use A$272 million from its cash reserves to fund the deal.

The acquisition boosts IGO’s nickel business from a short-life, single asset operation centred around its Nova nickel-copper mine in Western Australia (WA), into a multi-asset division with a total annual nickel output of 41-44,000 tonnes. Its current nickel production rate is 25-27,000 tonnes per year.

IGO will gain Western Areas’ Forrestania nickel operations South of Kalgoorlie, along with the Odysseus mine to the North of Kalgoorlie, which is scheduled to begin production by the end of 2022.

“Both Forrestania and Cosmos are high-grade, low-cost nickel sulphide operations and this acquisition, together with our existing world class Nova nickel-copper-cobalt operation, will consolidate our position as Australia’s leading independent nickel producer,” said IGO CEO Peter Bradford.

The deal marks what could be the beginning of a consolidation of nickel assets by Australian firms, as demand from the electric vehicles sector for the crucial battery metal accelerates. Nickel production would need to increase nearly four fold to meet expected demand for electric and hybrid vehicles, according to IGO.

BHP and Andrew Forrest’s Wyloo Metals are currently locked in an acrimonious bidding war over Canada’s Noront Resources, which owns the early-stage Eagle’s Nest nickel and copper deposit in Northern Ontario’s ‘ring of fire’.