The Lexpert Special Editions profiles selected Lexpert-ranked lawyers whose focus is in Corporate, Infrastructure, Energy and Litigation law and relevant practices. It also includes feature articles on legal aspects of Canadian business issues.
Issue link: https://digital.carswellmedia.com/i/1480531
10 www.lexpert.ca Feature Sander Grieve, head of the mining industry team at Bennett Jones LLP, says there is still some "tire kicking" in the mining marketplace, despite caution among poten- tial buyers and sellers holding back due to an expected price rebound. "Some of the pressure has come off price," he acknowledges, but "there's also the expec- tation that this is a temporary effect of where we are right now, which seems to be an infla- tion story," says Grieve. Rising demand for critical minerals In the long term, the "demand is there" for critical minerals, along with base metal components needed to feed the growing interest in decarbonization and electrifi- cation in sectors such as the auto industry, says Grieve. "If you looked at the recent flagging prices of copper and nickel, key components in electrification, you'd think that no one was going ever to drive an electric car," he says. However, this isn't likely to be the case. And indeed, while nickel prices are slumping, copper prices have rebounded somewhat from this year's lower prices. "ere are a lot of people who will sit on the sidelines now and watch to see how things settle out before they're going to insti- gate a deal or accept these current valuations," he says. "You might see a bit of an M&A slowdown, but that will change, as there are deals that must be done and people who will see opportunity." Jason Saltzman and Leanne Krawchuk at Dentons Canada also note the growing importance of metals such as copper and critical minerals to mining companies like Teck Resources as it strives to focus more on environmental sustainability. Teck mines for commodities such as coal for the steelmaking industry, copper, and zinc, but retiring CEO Don Lindsay recently said it would be placing a higher emphasis on projects related to the green economy. Says Krawchuk: "Companies like Teck are balancing their portfolios. So that may mean divestitures of oil and gas, thermal coal, any asset where they say they've got to reduce or change." Teck announced the NewRange Copper Nickel joint venture with PolyMet Mining to develop projects in Minnesota in the quest for critical minerals. One option the company is exploring is spinning out its 21.3-percent stake in the Fort Hills project in northern Alberta's oil sands. (Calgary-based Suncor Energy Inc. is the operator of Fort Hills and owns a 54.1-percent stake, while TotalEnergies SE of France has a 24.6-percent interest.) Other companies have used M&A to gain more exposure to critical minerals. For example, earlier this year, Australia's Rio Tinto completed the US$825-million acquisition of the Rincon lithium project in Argentina from Rincon Mining, a company owned by private equity group Sentient Equity Partners. In addition, Canada's Capstone Mining agreed to merge with Chile-focused Mantos Copper to create a copper producer focused on the Americas. Saltzman says potential purchasers for many critical resources may not all be tradi- tional buyers, such as other mining compa- nies. Manufacturers such as car companies may want materials essential to building the batteries that power electric cars. For instance, Talon Metals, through its US subsidiary Talon Nickel, recently entered an agreement with Tesla to supply and purchase nickel concentrate to be produced from the Tamarack Nickel Project in Aitkin County, Minnesota. is agreement is the start of an innovative partnership between Tesla and Talon for the responsible production of battery materials directly from the mine to the battery cathode. "When I first heard about the idea, I was scratching my head a bit, wondering if I understood. Isn't this a mining company and Tesla this big electric car company?" says Saltzman. "But if you think about it, it makes a lot of sense – car companies need these materials, so having an oake agreement can help guarantee a stable supply." Adds Saltzman: "From an M&A perspec- tive, the need and demand for critical minerals bring some interesting parties to the table as potential suitors." "It's challenging for boards to complete transactions if there are rapid changes in the price of metals. They are still looking for opportunities, but their execution is a bit more difficult" John Wilkin BLAKE CASSELS & GRAYDON LLP "Capital markets seem to be in a bit of a lull on the financing side, whereas with M&A activity, we're still seeing a fairly active market" Jen Hansen CASSELS BROCK & BLACKWELL LLP