Miner ACG Seeks to Raise $300mn in Trial of London’s Capital Markets

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Mining company ACG aims to raise $300mn in London’s capital markets to acquire two mines in Brazil, highlighting the growing interest in battery metals from carmakers and investors.

ACG, London’s pioneer mining Special Purpose Acquisition Company (Spac), plans to acquire nickel and copper mines in a $1.1bn transaction supported by Swiss miner Glencore, investment fund La Mancha, and automakers Volkswagen and Stellantis, each investing $100mn.

“London is the perfect spot for us,” said ACG CEO Artem Volynets, emphasizing that it remains the prime destination for mining companies to raise capital. Volynets, former CEO of En+ Group, added, “There is a wealth of expertise among investors who closely follow mining stocks.”

The fundraising, resembling an initial public offering more than a Spac, will be a crucial test for natural resources investors, especially during a challenging period for the London market. The recently abandoned $7.5bn IPO of WE Soda due to poor investor interest and the planned relocations of some London-listed companies to New York for higher valuations have added to the market’s difficulty.

“We are fully aware that the capital markets are tough at the moment, with a challenging IPO market for the past two years. We enter this endeavor with open eyes,” said Patrick Evans, managing director at Citi, an advisor for the deal.

While other mining companies have criticized European investors for their excessive focus on environmental, social, and governance concerns (ESG), Volynets appreciates the attention given to these criteria. He stated, “We provide low-carbon metal units, produced with exemplary ESG characteristics. This aligns with the mindset and preferences of investors in London.”

The acquisition deal, involving ACG purchasing two mines from private equity group Appian Capital, also sheds light on car manufacturers’ direct mining investments, a phenomenon unheard of until a few years ago. As part of the deal, Volkswagen’s subsidiary PowerCo is investing $100mn as a prepayment for future nickel supply from the mines, and Stellantis has contributed $100mn directly to ACG.

The Santa Rita mine in southeast Brazil produces nickel sulfide, while the Serrote mine in eastern Brazil produces copper and gold.

With Western governments increasingly concerned about China’s dominance in critical minerals used for electric vehicle batteries, carmakers have taken a more proactive approach to secure battery metals.

“The global supply chain is fragmenting into the Eastern and Western supply chains,” stated Volynets. “We are at the forefront of supplying the Western supply chain.”

Citi’s Evans explained that the fixed-price fundraising deal, with significant cornerstone investors already on board, has been structured to minimize risks in a challenging market.