Glencore (LON: GLEN) and China's CNGR have committed $40 million to Centaurus Metals (ASX: CTM) and agreed to buy the entire forecast nickel concentrate output from its $380-million Jaguar project in Brazil for its first five years of operation, bringing the mine closer to a final investment decision.
The two companies will each invest $20 million in Centaurus and purchase at least 20,000 dry metric tonnes of nickel concentrate annually under separate five-year agreements starting in the first half of 2029, the Australian miner said Wednesday. The contracts cover material containing 30% nickel, with an estimated combined net sales value of $900 million at current metal prices.
"With 100% of Jaguar's forecast output over the first five years now contracted and US$40 million of new strategic equity committed, we have significantly advanced both the commercial and funding foundations to develop the Project," Centaurus managing director Darren Gordon said in a statement.
The agreements strengthen Jaguar's prospects as Brazil seeks to expand its role in supplying battery metals to global markets. They also underscore the willingness of major commodity traders and Chinese battery-materials manufacturers to secure long-term nickel supplies, even as developers face substantial financing requirements and volatile metal prices.
Financing momentum
Centaurus said its senior debt financing process is well advanced, with the new equity commitments helping it complete the funding package required to authorize construction at Jaguar, in Pará state.
The investment will be made in two tranches, with Glencore and CNGR initially contributing $12.5 million each. A second payment of $7.5 million from each company depends on shareholder approval and a final investment decision. CNGR's participation also requires Chinese outbound investment approval, with conditions for the second tranche subject to a Jan. 31, 2027 deadline.
Both investors will receive shares priced at A$0.425 apiece, a 5% premium to Centaurus' 20-day volume-weighted average share price before the agreements were signed.
The new purchase commitments build on an existing Glencore contract announced in March. Together, the arrangements cover approximately 22,500 tonnes of contained nickel annually during Jaguar's initial five years of production.
Prices will be linked to the London Metal Exchange cash settlement nickel price, with the proportion of metal value paid to Centaurus varying according to market conditions. The contracts also provide payments for copper and cobalt byproducts.
The buyers can terminate their agreements if Centaurus fails to ship the first nickel concentrate by the end of 2029, leaving the developer facing a firm commercial deadline as it works to secure financing and begin construction.
Nickel pipeline
Brazil's nickel industry is attracting growing investment interest as mining companies position themselves to supply metals used in electric vehicles, batteries and other industrial applications.
The Brazilian Mining Institute (Ibram) expects nickel projects to attract $4.7 billion between 2026 and 2030, up 24.2% from its previous five-year investment forecast.
The outlook comes amid expectations of stronger long-term demand from electrification and potential supply constraints following production cuts in Indonesia, the world's dominant nickel producer. However, the sector remains exposed to price volatility and competition from lower-cost Indonesian operations.
Vale (NYSE: VALE), one of the world's largest mining companies, has said its copper and nickel businesses could contribute about 40% of its earnings before interest, taxes, depreciation and amortization in the coming years, reflecting the growing importance of base metals to its portfolio.
Other developers are advancing Brazilian nickel investments. In July, Brazilian Nickel secured support from the Brazilian National Development Bank (BNDES) for its $1.4-billion Piauí project.
MMG Singapore Resources has been less successful. The subsidiary of Chinese state-owned MMG, is seeking to resolve European Commission objections to its proposed $500-million acquisition of Anglo American's (LON: AAL) nickel assets in Brazil.
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