Mining Technology

Daily Newsletter

08 August 2023

Daily Newsletter

Nickel Industries seeks sale and investment approval at EGM

Indonesian mineral holding company DTN is looking to purchase 20% of Nickel Industries for $620m.

Australian miner Nickel Industries has called an Extraordinary General Meeting (EGM) seeking a share deal with PT Danusa Tambang Nusantara (DTN). The company wants shareholder approval for the placement of 857 million shares at A$1.10 per share, equivalent to $620m (A$943m) of investment.

The 857 million shares equate to roughly 20% of the total shareholding of Nickel Industries. Indonesia’s DTN is a subsidiary of manufacturer PT United Tractors (UT), and is the holding company for its mineral business, aiming to expand in the nickel market.

Much of the $620m investment will be used to finance Nickel Industries' purchase of a 55% stake in the Excelsior Nickel Cobalt project (ENC). The high-pressure acid leaching plant expects to produce as much as 72 tonnes per year of nickel equivalent.

A feasibility study is currently under way for the ENC project, ahead of a final investment decision for its initial stage. As part of the share purchase, DTN can choose to take a 20% interest in the ENC project. Nickel Industries said that investment in the plant by DTN would reduce the capital burden on Nickel Industries and expedite the project’s completion.

In June, Nickel Industries managing director Justin Werner said: “We believe that benefits of collaboration with UT are significant for Nickel Industries and will enable us to partner with a large and influential Indonesian mining company to jointly pursue growth opportunities in Indonesian nickel.

“UT with its significant mining, power and infrastructure development and operating experience in Indonesia, substantial financial resources, and long-term return focus will add substantial value to us.”

The ENC project is set to be housed in the Morowali Industrial Park in Indonesia. This week, Nickel Industries announced the completion of a haulage road between the industrial park and its 80%-owned Hengjaya mine.

The road is expected to as much a -triple ore sales by expediting delivery, with the current 2.5 million tonne per year (mtpa) sales level estimated to rise to 10mtpa. The investment into the ENC project then could further increase production for the company in the country that was the world’s largest producer of the metal in 2022.

In April, Nickel Industries finalised the 100% purchase of the Cyclops nickel-cobalt project, also in Indonesia.

ESG 2.0 marks a shift towards stricter environmental rules

ESG is moving into a different era, which we call ESG 2.0. While ESG 1.0 was driven by voluntary corporate action, spurred by pressure from activist consumers and investors, ESG 2.0 is being driven by a new wave of government policies. The EU has taken the regulatory lead, with rules introduced or in the pipeline that will price emissions, regulate the use of the terms ‘ESG’ and ‘sustainability’ in marketing materials, and make ESG reporting mandatory. The US has taken a different approach, favoring less regulation and more financial support in the form of tax breaks for clean industry (renewables plus nuclear and hydrogen). China is planning to expand its emissions trading system to more sectors, decarbonize its heavy industry, and ramp up its use of renewables. The new policy direction is mainly motivated by the ambition to hit net zero emissions targets. But on top of this, governments are now competing for clean industry and trying to challenge China’s leadership on the production of the world’s green technologies such as solar panels and batteries, as well as the production and refinement of materials needed for energy transition such as lithium. These driving forces are leading to policy that will impact every sector, not just heavy industry, and will keep ESG near the top of the regulatory agenda over the longer term.