At least three mining companies are jostling to take control of a $1 billion nickel mine in Guatemala, according to reports.
Montreal-based Central America Nickel (CAN), London-headquartered ElementX and a private equity fund linked to controversial Israeli tycoon Beny Steinmetz are all making a play for the Fenix Project, Mining Journal reported.
Fenix’s current owner is Switzerland-based Solway International Group but the company was sanctioned last year by the US Treasury Department over corruption allegations and links to Russia. As a result, mining operations have been suspended and hundreds of Guatemalan miners have lost their jobs.
According to Mining Journal, the companies are hopeful of snapping up the asset, which includes the mine and an accompanying processing plant, at a large discount because of the sanctions.
Fenix represents one of the most attractive and lucrative mining acquisitions anywhere in the world. The mine’s current output is 1,000 tpm. Latest estimates suggest Fenix sits on 36.2 Mt of 1.86% nickel ore.
The price of nickel has soared to around $30,000-a-tonne in recent years as a result of its use in electric vehicles. It is expected to be one of the world’s key resources by 2050 as nations attempt to transition to more environmentally-friendly modes of transport. It is also a vital ingredient in the manufacture of stainless steel.
Interest in acquiring Fenix reportedly comes amid US Government efforts to catch up with China which controls the strategic metal. China refines 68% of nickel globally and controls more than 90% of output from Indonesia which has the largest nickel reserves in the world
Mining Journal reported: “Last year, in an effort to lessen dependence on China for critical minerals, the Pentagon expanded a programme to bankroll mining exploration that included Canadian companies.”
Industry insiders told Mining Journal that they believed the US Government had “deliberately targeted the mines to seize control of the strategic assets”.
Separately, a senior representative at CGN, one of Solway’s sanctioned subsidiaries, told Mining Journal that he believed sanctions were imposed to tighten the US Government’s grip on nickel supplies, rather than due to alleged corruption or links to Russia.
“Our mine, in general terms, is the third mine in the world in terms of deposits after Russia and after Indonesia. And it has the advantage that it is closer to home for the US. Is it better for the US to take on Indonesia or is it better for them to look at Guatemala?”
CAN, which was founded in 2015 by Canadian businessman Pierre Gauthier, already has a presence in Guatemala with two subsidiaries, as well as operations in the Democratic Republic of the Congo and Nigeria.
CAN’s sister company Auxico was founded in 2014 and is listed on the Canadian Securities Exchange. Last year, Auxico made a number of high profile appointments with impressive links to the US Government. Byron King, who served in the US Navy before advising the Department of Defence on national energy policy, was made an independent non-executive director in November 2022.
ElementX is a London-based firm owned by a company called Ropa Investments. Its board includes Rohan Patnaik, a mining entrepreneur, and Otto Reich, a well-connected US diplomat who served under Presidents Ronald Reagan, George HW Bush and George W Bush. The company already owns more than a dozen mines in 15 countries including the US, Brazil and Guatemala. ElementX executives have reportedly sent letters to the Guatemalan Ministry of Mines declaring the company’s interest in purchasing the assets.
GSOL is a private equity fund which was started in 2009. Its portfolio already includes the Falcondo project in the Dominican Republic, a fully-integrated mine and refiner, and Euronickel, a processing plan in Macedonia. Mining Journal cited “alleged links” to Beny Steinmetz, a controversial Israeli businessman with a particular focus on mining and real estate. Steinmetz has faced numerous bribery and corruption allegations.