Nick Hodge,
Publisher
Aug. 19, 2023
Last month, an article appeared in Bloomberg titled: "VW, Glencore Back $1 Billion SPAC Mine Deal to Secure EV Metals."
It began like this:
Russian metal industry veteran Artem Volynets’ blank check firm agreed to acquire two Brazilian mines for $1 billion including debt in a bid to tap demand from electric-vehicle makers.
London-listed ACG Acquisition Co. is buying the assets from private equity firm Appian Capital Advisory. Volkswagen AG’s battery arm will support the deal with a $100 million prepayment for future nickel deliveries, while commodities trader Glencore Plc will buy $100 million of ACG stock.
The transaction includes a nickel sulphide mine in Santa Rita, known as Atlantic Nickel, as well as the Mineraçao Vale Verde copper mine in Serrote. Chrysler owner Stellantis NV and La Mancha Resource Capital have agreed to buy $100 million of ACG stock apiece, according to the statement.
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It’s a big deal — figuratively and literally.
Figuratively because it continues to show the willingness of automakers and metals conglomerates to open their checkbooks for battery metals deals. And it comes on the heels of other deals involving large automakers partnering directly with miners, including GM and Ford.
Literally because multiple well-known names are participating to the tune of $1 billion. In addition to Stellantis, Volkswagen and Glencore each ponying up $100 million:
- La Mancha Resource Capital will buy $100 million of ACG stock;
- Royal Gold has committed $250 million of royalty financing;
- Citigroup, ING, and Societe Generale are arranging $300 million in debt; and
- Rothschild, Citigroup, Standard Chartered, BMO, and RBC are either advising or acting as placement agents.
All for copper and nickel produced in Brazil with hydropower to support the fast-growing EV market.
I’m viewing it as a global kickoff party for the battery metals arms race.
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View PublicationsAnd Big Oil is getting involved, too.
This month, multiple outlets reported that Exxon is in talks with Tesla, Ford, Volkswagen, and Asian battery manufacturers to supply lithium. Bloomberg said that “Chevron Corp., Occidental Petroleum Corp. and SLB, the world’s biggest oil-services provider, have all said they’re considering or actively exploring opportunities in the metal.”
That’s a trillion dollars’ worth of market cap looking to get into the lithium space. Albemarle, the world’s largest lithium miner, has a market cap of just $24 billion and could be swallowed like a small boat.
Saudi Arabia is coming to the party, too.
It is paying $2.6 billion for a 10% stake in the base metals unit of Vale, the Brazilian-based international miner. It is the wealthy oil nation’s first major investment in mining.
Similar investments should be on your shopping list.
Around here, Gerardo is fresh off 10,900% gains from a tiny Quebec lithium explorer named Patriot Battery Metals. He’s been on the prowl for the next quadruple-digit battery metals’ gains ever since, and now he thinks he’s found a similar setup.
You can see the stock he thinks will create “the new EV millionaires” right here.
Nick Hodge
Publisher, Daily Profit Cycle