London-listed ACG Acquisition Company, a special purpose acquisition company headed by industry veteran Artem Volynets, will buy two Brazilian nickel mines for $1-billion, as the company aims to capitalise on growing demand for metals crucial to the global energy transition.

ACG will buy Atlantic Nickel and Mineração Vale Verde (MVV) from investment adviser Appian Capital Advisory for $1-billion, as well as the gold royalty on MVV for $65-million.

Atlantic Nickel is the owner of Santa Rita, one of the biggest openpit nickel sulphide mines in the world, located in Bahia. Appian bought Atlantic Nickel, previously Mirabela Nickel, out of bankruptcy in 2018. In the same year, Appian also bought MVV, owner of the Serrote greenfield copper/gold asset and subsequently commissioned the mine.

Upon closing, ACG will be renamed ACG Electric Metals, creating the only London-listed nickel sulphide producer with pure play electric metals exposure.

“ACG Electric Metals will be a company designed to take advantage of the opportunities presented by key global trends: the massive increase in demand for battery metals, the polarisation of supply chains, and the need to reduce the world’s total carbon footprint – from the mine to the end-customer.

“These high-quality mines will enable ACG’s mission to be the green metals supplier of choice to western EV automakers. This acquisition establishes a solid platform for further growth and long-term shareholder value creation,” said Volynets.

ACG has entered into long-term investment partnerships with global commodities group Glencore, Volkswagen’s in-house battery development subsidiary PowerCo and automotive conglomerate Stellantis, for offtake and funding.

Glencore will be an anchor investor, having committed $100-million and becoming an offtaker of choice for ACG, which will supply Glencore’s western European and North American refineries.

PowerCo has committed to a binding $100-million prepayment to ACG for equivalent nickel units to the tonnage contained in a portion of the concentrates produced by the Atlantic Nickel mine at Santa Rita. Stellantis also committed to a $100-million anchor equity investment in ACG.

In addition, mining investment fund, La Mancha, has committed to a $100-million anchor investment in ACG.

The remainder of funding for the transaction comes from binding commitments in the form of royalty financing from Royal Gold, senior bank debt underwritten by Citigroup, ING and Societe Generale, which also agreed to provide a revolving credit facility and a planned equity offering by ACG of $300-million.

The equity offering provides a broader universe of institutional investors with the opportunity to participate in ACG’s future value creation. The Appian funds have offered to backstop up to $50-million of the equity financing.

Following completion of the transaction, the assets’ operating teams will join ACG, providing continuity to drive future success. Current managers, Paulo Castellari-Porchia and Milson Mundim, will continue to oversee Atlantic Nickel and MVV, having managed the assets for several years, achieving strong operational results, environmental, social and governance performance and a leading safety record.

"Appian began investing in decarbonisation commodities a decade ago, recognising that society was structurally undersupplied for the upcoming energy transition. This innovative transaction in the battery metals space will mark Appian’s tenth, eleventh and twelfth exits, reflecting the strength of our operating model and ability to identify, acquire and optimise mining assets. Likewise, ACG is a great custodian for Atlantic Nickel and MVV, and is well placed to unlock significant further growth from these market-leading companies," said Appian founder and CEO Michael W. Scherb.

He added that the Glencore, Volkswagen and Stellantis partnerships were particularly notable, underlining the growing need for electric vehicle commodities and the demand for robust, transparent and traceable supply chains from western automotive original equipment manufacturers.