Belgium’s Umicore is to acquire Freeport Cobalt’s cobalt refining and cathode precursor activities in Finland as an “important step” toward expanding the company’s battery materials business.
The deal, which is expected to be finalised by the end of 2019, is for a total consideration of US$150 million on a debt and cash free basis, plus the value of the working capital to be taken over at closing, which at the end of March was approximately $40m.
Umicore said it is not acquiring the cobalt fine powders, chemicals, catalysts, ceramics and pigments activities located on the same site at Kokkola in Western Finland. These activities will continue to be run by Freeport Cobalt.
But having R&D, refining, precursor production, cathode materials production and battery recycling operations located in Europe, Umicore said it will be “ideally placed to serve the European operations of its battery cell and automotive customers with a fully integrated, sustainable and local battery materials supply chain”.
This will enable Umicore to “contribute significantly to the European Union’s plans to create a competitive and sustainable battery ecosystem in Europe”, the company said.
The transaction will be funded from Umicore’s existing credit facilities and is expected to be earnings accretive from 2020 and value accretive from 2021, “after completion of the integration process and a significant reduction of the net working capital resulting from supply chain synergies”.
Umicore said the Kokkola refinery will be supplied through the company’s long-term agreements that source cobalt raw materials “exclusively from best-in-class industrial-scale cobalt mining operations, which operate in full conformity with Umicore’s sustainable procurement framework for cobalt”. Umicore said the agreements enable it to certify that its products “do not contain any artisanally-mined cobalt units and are free of any child labour”.