Glencore, in collaboration with the Ontario Teachers’ Pension Plan have announced the creation of a new partnership called BaseCore Metals, focused on base metals streams and royalties. The $700m base-metals royalty company will be a 50:50 joint venture limited partnership. This will be the first of its kind to specialize on base-metals.
The partners will each have a 50% stake in the company. Glencore will provide royalty agreements from about 10 mines, while OTPP will contribute about $350m in capital to allow the company to buy further royalty streams from other projects. The Royalty Portfolio includes a selection of existing royalties on producing and development stage properties in North and South America, including the Antamina and Highland Valley mines as well as the Horne 5 and El Pilar projects. Glencore’s 33.75% stake in Antamina in Peru is the largest royalty stream included in the package. This stream produces copper, zinc and silver. Glencore will also contribute several smaller streams it owns from other mines in South America and Canada. Through this deal, the world’s first major base metals-focused royalty company will be created. BaseCore Metals will actively pursue investment opportunities, focusing primarily on base metals streams and royalties. BaseCore Metals will provide future transaction partners with deep sector expertise, operating and technical skills alongside access to capital.
Of the deal, Glasenberg said, “The creation of BaseCore Metals is unique in the sector and will enable us to secure further offtakes for our marketing business. We are pleased to be partnering with Ontario Teachers’ to take advantage of the significant opportunities that are expected to emerge across the sector in the coming years.”
Andrew Claerhout, Senior Managing Director, Infrastructure and Natural Resources at Ontario Teachers’ added: “This investment in BaseCore Metals and base metal streams and royalties reflects an important component of Ontario Teachers’ Natural Resources mandate to ensure attractive relative returns through exposure to commodities that are well-positioned to benefit as the world transitions to a low-carbon economy. Working with strategic operators who have an active presence in key industries is a central tenet of Ontario Teachers’ investment strategy, and we are pleased to be forming this partnership with Glencore.”
Glencore is one of the world’s largest diversified and vertically-integrated commodity producers, processors and traders. They market and distribute to a wide customer base that includes the industrial, automotive, construction, steel, power generation, oil and food processing industries. Glencore benefits from the deal because it will provide a way to secure further metal supplies for its powerful marketing business without using its own balance sheet. Instead, they will be able to use Ontario Teachers’ cash contribution to finance junior mining companies in return for royalty streams and exclusive marketing deals. Furthermore, Glencore CEO Ivan Glasenberg will be able to expand his control of key commodities without extending his company’s balance sheet.
Ontario Teachers’ is Canada’s largest single-profession pension plan with $175.6 billion in net assets. They pay pensions and invest plan assets on behalf of 318,000 working and retired teachers. The Ontario Teachers’ Pension Plan is will benefit because the deal offers a new way to invest in the metals markets as the outlook for materials including copper, zinc and nickel strengthens.
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Read about the new partnership agreement between Barrick Gold and the Tanzanian government HERE.