Posted on 21 Feb 2023
Hedonova, a Paris-based hedge fund, has exited its 76% stake in an Indonesian nickel miner Mineralindo Morowali, Kallanish notes.
Hedonova sold the stake to a consortium of Chinese mining companies called Indo-pacific Net-zero Battery-materials Consortium (INBC) for $31 million in an all-cash transaction.
The stake was acquired for $10 million in February 2020.
Hedonova will also exit its complementary investments in the region, including $4 million in leased equipment, a smelter, a current inventory of 300 tonnes of nickel ore, and a 30 megawatt/hour solar power plant that supplies electricity to the mine.
“There is general bullishness around long-term nickel prices, but we decided to exit given environmental concerns in the Morowali region. Increased competition and lowering environmental, social and governance (ESG) conditions led to us exiting the mine,” Hedonova chief executive officer Alexander Cavendish says.
Although nickel is an essential component of lithium-ion batteries, which are used in electric vehicles, he opines that the development of new battery technologies that use fewer amounts of nickel or no nickel at all could reduce demand.
In addition, he says an economic slowdown or recession could also reduce demand for nickel as it is primarily used in industrial applications.
Furthermore, he says the supply of nickel could also increase as new mines are developed or existing mines increase production, which could lead to an oversupply and lower prices.
“Finally, increasing trade tensions and geopolitical risks could also negatively affect demand for nickel and cause prices to decline,” he adds.
Source:Kallanish
