FPX Nickel Welcomes Another Strategic Partnership and we Discuss Realities of 21st Century Mining
My first interview with FPX Nickel came the very same day another major partnership was announced. CEO Martin Turenne joins me to discuss a variety of relevant topics to his investors.
tl;dr:
My first sit down with CEO Martin Turenne of FPX was a busy one. The morning of our interview, news came out that FPX had acquired another strategic partner, bringing on Japanese company Sumitomo in another major derisking event for the company. Designed with the idea in mind that FPX is already well known, topics were more involved than your typical introductory company interview. The wide-ranging interview centers on a discussion of the new partnership, conversations around ongoing First Nations negotiations, updates on FPX’s many partnerships, and a reflection on what Martin believes needs to change most for the mining industry to be able to continue to grow and meet the needs of an evolving society in a sustainable fashion.
3 Parts: 1. The Interview; 2. My Companion Article; Summary and Transcripts
1. The Interview
2. Companion Article
Okay, so this is my first time sitting down with CEO Martin Turenne and FPX Nickel. Typically these interviews get “the treatment” - I do a round of due diligence as I would an investor new to the company and build my questions around making sure the basics get covered before delving into some secondary-level questions based around MD&A or technical reports.
However, because FPX is such a well-known company at this point, I thought there was more value in bypassing this more basic line of questioning and instead try to delve into specific topics relevant to current investors who don’t need a reminder of the basics.
On the off-change you aren’t familiar with FPX, though, it is a good story. Geologically unique in ways that have proven to be metallurgically advantageous, a big part of the early story for FPX was convincing people their type of mineralization (Awaruite) could be a legitimate nickel deposit. However, that debate seems like it has by-and-large been put to rest. With the release of a recent PFS, FPX continues to demonstrate the economic viability of its Baptiste project.
2023 in particular has been transformative in this regard, as FPX has negotiated a series of strategic partnerships with critical international companies and organisations. So there are a lot of very smart and knowledgeable groups who will have no doubt done exhaustive DD and liked what they’ve seen enough to literally buy into FPX’s story.
This unique, forward-looking project hit a snag recently though, as the Tl’azt’en Nation - one of four first nations whose traditional land the Baptise project falls on - withdrew its support for the project in recent months. FPX - which is an industry leader in terms of its authentic engagement with ESG efforts - now finds itself back to the drawing board a bit in terms of building community support and buy in. However, this unexpected dose of risk wasn’t enough to prevent FPX from announcing important news this past Wednesday: Another partnership wih a global nickel player, Japanese company Sumitomo.
In addition to the confirming nature of having such a major name formally buy in, I would argue this announcement also serves to reduce risk and concern regarding the Tl’atz’en. I find it unlikely that a company such as Sumitomo would formally invest in a project it had sincere doubts would ever move to production due to community opposition.
Much of our conversation centered around two topics. The first was the obvious discussion of the Sumitomo deal (and FPX’s partnerships in general) - how were the negotiations? How did FPX get included clauses that so meaningfully strengthen its position? How do you balance signing agreements that progress the project while maintaining enough value to make Baptiste attractive to a buyer?
The second was a discussion of First Nations concerns, needs, and relationships. What needs to change for these sorts of outcomes to end positively? What is FPX’s ongoing relationship in these communities like? How do we build trust in communities that have had outsized exposure to all the downsides of mining over previous generations? And what role does government need to play in mediating economic reconciliation efforts between these projects and their impacted communities?
Ultimately I tried to build an interview relevant to followers of FPX who already know the story. Thanks here to the followers on CEO.ca for their questions - I tried to work from them where I could. Also note I listened to 2 other presentations Martin held that day and worked to avoid questions held in them - I thought that rather than intentionally build in redundant overlap I might be able to build content that complements other works.
FPX finds itself between two competing tensions - the obvious affirmation of signing so many strong deals with so many strong companies - and the concerns of losing key local supports. Given FPX’s dedicated corporate attitude to ESG and community relations, I am of the mind that the Tl’atz’en MOU will end up reengaged and reconfirmed. But that remains a core risk, and one gets the sense that FPX is slow-rolling its work while dealing with the issue.
Nevertheless, in a vacuum and considering only matters of economic viability and environmental sustainability, the Baptiste project is world-class and deserving of recognition. Hopefully the positive impact it promises to have on both the local an international communities proves to be persuasive enough to get whatever negotiations that are currently going on behind the scenes successfully resolved.
Please take a scan below to get a sense of the specific topics we covered, (not to mention to watch the interview!) and please use the timestamps here and in the YouTube notes to navigate. Thanks for reading. Hope you enjoy.
3.Timestamped Summary + Transcripts
Click here for a link to the transcript.
01:00 Introducing FPX and its Baptiste Project
FPX Nickel Overview (01:30.000)
Baptiste project: one of the largest undeveloped nickel deposits globally.
Notable features: low cost, low carbon footprint, and a smelting-free production process.
03:23 Sumitomo Partnership Introduction
Strategic Investments (02:32.318)
FPX Nickel have received investments from three large groups, including Sumitomo Metal Mining.
Discussion on a new partnership with Sumitomo, a significant equity investment at a premium share price.
Sumitomo Partnership (04:48.462)
Sumitomo's investment represents confidence in FPX's project management and economic viability.
Discussion on the broader industry trends, including M&A activities.
09:00 What sort of negotiation was it? Other interested parties? Strength of FPX’s dealmaking
Negotiation Insights (09:31.818)
Back and forth in negotiations, with multiple interested groups, ensuring a strong outcome for FPX shareholders.
Offtake Agreements (11:51.046)
Strategic approach in negotiations, emphasizing asset quality and diverse potential partners.
13:40 How do you balance bringing in partners and preserving value for would-be buyers? How much of your offtake have you sold?
21:00 First Nations Sovereignty and Negotiatons – What do they look like
First Nations Engagements (21:19.278)
Four First Nations impacted by the project.
Each nation is a distinct entity with individual governance and traditions.
FPX aims for respectful engagement and collaboration with all nations.
Environmental and Cultural Baseline Studies (27:18.302)
Conducted by a local indigenous-owned business.
Will inform the environmental assessment process and collaborative project development with impacted nations.
29:00 Discussing the two nations FPX does not have an agreement with
35:20: BC Critical Mineral Strategy – overview
Critical Mineral Strategy (35:56.378)
Involvement of various stakeholders.
Focus on opportunities in the upstream sector and economic reconciliation with First Nations.
38:30 What changes would Martin like to see in our approach to how we manage our minerals?
44:10 Does the delay of the critical mineral strategy delay your environmental permitting process?
Environmental Assessment (45:27.358)
No impact on EA process from delays in critical mineral strategy.
FPX aims to enter the EA process with established positive relationships with impacted nations.
46:00 How do we get to the point where clean mining is valued in a way that prioritises it over dirty mining?
Nickel Pricing and Environmental Standards (50:10.614)
Discussion on market mechanisms for valuing responsibly produced materials.
Possibility of higher prices for low carbon nickel in bespoke contracts.
Let me know what you think about FPX or my work! I am always eager to improve.
Thanks for reading.
-Matthew from JRI
