Stay informed with free updates
Simply sign up to the Mining myFT Digest — delivered directly to your inbox.
Governments will strike more deals with private investors as they race to secure supplies of critical minerals, according to a mining-focused investment firm that has signed an agreement with an arm of the World Bank.
Appian Capital Advisory, which manages about $5bn in assets, has held talks with a number of countries seeking access to vital commodities needed in advanced manufacturing, its chief executive Michael Scherb told the Financial Times.
“Governments are struggling to get security of supply” as they look to guarantee the long-term availability of rare earth elements and important metals such as nickel, he said.
“We’re in discussions with many governments about Appian being their avenue into the natural resources space,” Scherb continued. “You’re going to see a lot more international investing by governments and more public-private partnerships similar to what we’ve done.”
Appian will on Tuesday announce a deal with the World Bank’s International Finance Corporation to invest $1bn into critical minerals and metals projects in emerging markets.
The investments will be managed by Appian, with an initial $100mn from the IFC and the rest raised from sovereign investors, pension funds, endowments and others.
The capital-intensive mining industry has often struggled to attract large-scale and longer-term investments, in part due to the protracted lead times and high risks associated with new projects, analysts say.
But with policymakers in the US and Europe waking up to the dominant position that China has built in critical minerals, the race is on to find ways to catch up and bolster their supply chains.
The US government has made equity investments and extended loans to several mining companies, taking a stake in General Motors-backed Lithium Americas and striking a $400mn deal with rare earths miner MP Materials.
The US has also held talks with private equity firm Orion Resource Partners about a multibillion-dollar fund to invest in overseas mining projects.
The first investment in the IFC partnership will be Atlantic Nickel, a Brazilian miner at the centre of a legal bust-up that Appian has struggled to sell.
Appian successfully sued South Africa’s Sibanye-Stillwater for pulling out of a deal for Atlantic Nickel and Brazil’s MVV in 2022. An attempt to sell Atlantic Nickel to a group investors including Glencore also fell apart.
“Selling a nickel mine in this environment is nearly impossible, so we’ve decided just to simply go and build it,” said Scherb. Nickel prices have slumped amid a supply glut driven by a surge in Chinese and Indonesian mined production.
Makhtar Diop, managing director of the IFC, said: “Partnering with companies like Appian will help bring more private capital to places that need it the most, expanding access to critical resources and helping local communities benefit from the development of their mineral wealth.”
Read the full article here