IGO’s stricken Western Areas assets face year-long, $275m blowout
IGO, the West Australian nickel and lithium miner that slashed almost $1 billion from the value of assets it acquired from Western Areas, faces a year-long delay and a $275 million cost blowout on that project.
That is the conclusion of equities analysts at Macquarie of progress on the Forrestania and Cosmos nickel projects, which IGO paid $1.3 billion for last year. The disclosure that IGO would be writing off those projects has wiped $1 billion from the company’s market capitalisation. IGO shares fell another 3.8 per cent on Tuesday to close at $14.82, down 58¢.
Matt Dusci, acting chief executive of IGO. Trevor Collens
IGO, which also has extensive lithium interests via a joint venture with China’s Tianqi, bought the two assets in June last year – the Forrestania nickel concentrate producing operation about 400 kilometres east of Perth, and Cosmos, a development project with at least a 10-year mine life to warrant an investment in downstream processing.
The acquisition of the two assets expanded IGO’s nickel portfolio from one to three projects. The miner’s push into nickel comes as the commodity has become a desirable metal essential to decarbonisation and prioritised for its use in electric vehicles in high-purity battery grade form.
The miner has proposed a joint venture with billionaire businessman Andrew Forrest to build a West Australian nickel processing hub to make sophisticated battery materials in Australia. But the write-down and delays at the new nickel assets prompted brokers at Citi to tell their clients that they were sceptical that these plans would go ahead.
The miner admitted on Monday the size of the downgrade was “significant” and said it was based on expected higher capital and operating costs, a
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