Noront chooses Wyloo's latest quotation to compete for nickel further

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Noront Resources (TSX-V: NOT) said on Tuesday that it chose to accept the latest offer from Australian billionaire Andrew Forrest's Wyloo Metals, giving BHP (ASX, LON, NYSE: BHP) five working days to match the offer.

However, the world's largest miner said later in the day that it did not see "sufficient long-term value" to increase its offer of C $0.75 a share to match Wyloo's offer.

Last week, Wyloo raised its offer for a stake not yet held by Nickel Canada to C $1.10 a share, 35 cents higher than BHP's offer.

Wyloo's improved offer values Noront at C $616.9 million (US $477.2 million), 57 per cent higher than its previous offer. The company said it would help pay Noront's termination fee to BHP in the form of a loan.

Earlier this month, BHP concluded talks with Wyloo because the Melbourne miner could not win support for the offer from Forrest, which is already a major shareholder of the Canadian company.

The two Australian miners have been engaged in a tug-of-war since July, making a competitive offer for Noront. It is related to the acquisition of the Eagle Nest nickel and copper mine, which is targeted in the early stages of the Ring of Fire in northern Ontario.

The asset is described by Wyloo as the largest high-grade nickel discovery in Canada since the discovery of the Voisey's Bay nickel mine in Newfoundland and eastern Labrador.

Eagle Nest is expected to start commercial production in 2026, with the mine operating for the first 11 years.

Noront repeatedly postponed the start date of the mine because successive federal and provincial governments were unable to negotiate and reach an agreement with the indigenous peoples of the area.

Forrest, chairman and founder of iron ore producer Fortescue Metals Group (ASX: FMG), plans to lead Noront's new board if the acquisition is successful.

"although the Eagle Nest deposit is a promising resource, we do not believe that BHP shareholders have sufficient long-term value to support BHP's increased offer," Johan van Jaarsveld, chief development officer, said in a statement.

The competition between the two is the latest evidence that global miners are eager to ensure an adequate supply of battery metal ahead of an imminent surge in demand for electric vehicles.

The company estimates that nickel production will need to increase nearly fourfold to meet expected demand for electric and hybrid vehicles. Similarly, copper production will need to be doubled to meet the needs of renewable energy generation, battery storage, electric vehicles, charging stations and related Electroweb infrastructure.

Elon Musk (Elon Musk), Tesla's boss, has expressed concern about the looming shortage of nickel. He begged miners last year to produce more nickel, promising a "giant contract" for the supply of efficient and "environmentally sensitive" production.

The American electric car giant signed a multi-year nickel supply agreement with Proney Resources of New Caledonia in October. The contract guarantees about 42000 tons of metal needed to produce batteries for electric vehicles.

Tesla signed a similar agreement with BHP Billiton.