By Adrian Rauso
Copyright thewest
Battery metal miners Liontown Resources and IGO are likely among the potential buyers sniffing around BHP’s idle WA Nickel division.
BHP put the mothballed business unit up for sale last month and has reportedly hired Macquarie and UBS to field bids.
WA Nickel is comprised of mines, concentrators and a smelter in the Goldfields, a refinery in Kwinana, and the quarter-built West Musgrave mine near the desolate junction of the WA-NT-South Australia border.
It is understood BHP’s preference is to sell the sprawling nickel division as a whole. But Liontown and IGO are rumoured to only be interested in acquiring particular parts of the business.
Liontown last month raised more than $315m and publicly expressed interest in using some of that cash to pursue M&A opportunities.
After this capital raising was announced, Liontown chief executive Tony Ottaviano told The West Australian where the lithium miner’s M&A hunt was focused on.
“What this (raising) enables us to do now is to be very deliberate and surgical in potentially deploying a little bit of capital to look at opportunities within range of our Kathleen Valley mine to further support its resource,” he said.
“So it’d be hugely value accretive if we can find something close by to Kathleen Valley and then expand Kathleen Valley on the back of that additional resource.
“We can now start potentially negotiating with third parties and also start looking at some greenfields exploration ourselves — something we are very good at.”
Kathleen Valley is sandwiched between two BHP sites — the Mt Keith mine and the Leinster mine and concentrator.
A nickel concentrator can hypothetically be retrofitted into a lithium processing plant — an idea Mineral Resources wanted to pursue before it ran into a cash crunch.
Liontown and BHP also have a number of neighbouring exploration tenements in the region and have even fought over the same turf in the past. Liontown declined to comment on the speculation.
IGO, meanwhile, would be interested in buying the $1.7 billion West Musgrave nickel-copper project, according to several fund manager sources.
The Ivan Vella-led company has said it is keen to branch out into copper and already has experience mining nickel.
But the size of purchase could be too much for the struggling lithium and nickel miner to stomach. IGO declined to comment.
Japan’s Sumitomo Metal Mining is rumoured to be the front-runner if BHP wants to offload WA Nickel in its entirety.
WA Nickel has a rehabilitation liability of at least $1.3 billion, meaning any buyer would need deep pockets even if the business unit was sold for nothing.
Sumitomo has continued to pour money into Ardea Resources’ Goongarrie nickel project near Kalgoorlie during a time where investment in early-stage nickel projects across WA has virtually dried up.
And the Japanese chemicals and battery manufacturing giant has already proven it can spend big on WA mining developments — forking out $615m for a 30 per cent stake in Rio Tinto’s Winu copper-gold project.
BHP declined to comment on any queries related to the WA Nickel sale.
