January 23, 2020 / 11:37 AM / a month ago

Private equity fund GSOL eyes takeovers to expand ferronickel business

LONDON (Reuters) - A private equity fund, which has grown in five years to be the world’s second biggest producer of stainless steel ingredient ferronickel, is holding talks about four or five potential acquisitions, one of its executives told Reuters.

FILE PHOTO: A worker displays nickel ore in a ferronickel smelter owned by state miner Aneka Tambang Tbk at Pomala district, Indonesia, March 30, 2011. REUTERS/Yusuf Ahmad/File Photo

The Global Special Opportunities Ltd (GSOL) fund aims to boost its output of 50,000 tonnes a year of ferronickel both by expanding its current two operations and possible takeovers, Marcos Camhis said.

Ferronickel is a combination of nickel and iron used to produce stainless steel, which accounts for around 70% of total nickel demand.

“We’re on the lookout for additional projects in the nickel space, both in terms of ferronickel industrial assets, plants, and also in terms of undeveloped greenfield projects in mining,” Camhis, a director of GSOL, said in an interview this week.

“We have had active discussions with four or five different assets, some very preliminary to more advanced,” he said, adding that all of the assets were still under consideration.

He declined to identify the possible takeover targets.

Industry sources said one asset that may be of interest to GSOL is Larco in Greece, which had been Europe’s biggest nickel producer but has been struggling under heavy debt.

The government, which owns 55% of Larco, has been working to avert a closure.

Since 2015, GSOL has revived the Falcondo operation in the Dominican Republic, which it bought from Glencore (GLEN.L), and also reopened the former Cunico plant in North Macedonia.

At Falcondo, where output had been suspended by Glencore, GSOL restarted one production line in 2016 and a second in 2018, and has now ramped up to around 30,000 tonnes a year of nickel contained in ferronickel.

The other operation, renamed Euronickel, is now producing around 20,000 tonnes after GSOL acquired it last year and invested 100 million euros ($111 million).

“There’s certainly room to grow our existing assets with further capex to reduce costs and increase production,” said Camhis, declining to say how much production could rise.

GSOL has grown to be the world’s second biggest ferronickel producer after Eramet SA (ERMT.PA) and ahead of third-ranking SNNC/Posco (005490.KS).

Camhis is also on the board of Niron Metals, a private company led by former Xstrata boss Mick Davis, which is developing the Zogota iron ore project in Guinea.

GSOL has a 25% stake in Niron Metals.

Camhis had previously helped run asset manager CMA, which had $3 billion of assets when it was sold to Swiss bank EFG International in 2006. He then founded Geneva-based FOS Asset Management, which acts as the investment adviser to GSOL.

Reporting by Eric Onstad; Editing by Mark Potter

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