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A view of a new nickel sulphate plant that global miner BHP Group is building to service the battery industry at its Nickel West operations, south of Perth, Australia, Aug. 2, 2019.Melanie Burton/Reuters

BHP Group Ltd. has increased its bid for Noront Resources Ltd. , outgunning fellow Australian mining heavyweight Wyloo Metals Pty Ltd. as the fight for the Ring of Fire operator intensifies.

Melbourne-based BHP, the world’s biggest mining company, said it will pay 75 cents a share in cash for Toronto-based Noront Resources, five cents higher than Wyloo is willing to pay. Noront’s board has also backed BHP’s latest $419.3-million bid and is recommending shareholders tender.

Wyloo holds 37.2 per cent of Noront’s shares, and said it has no intention of tendering to BHP. However, BHP doesn’t need Wyloo’s support for its bid to succeed. The threshold for success is at least 50 per cent of the shares it doesn’t already own, or 48.15 per cent.

“We’re pretty confident we’re going to get there,” Johan van Jaarsveld, chief development officer with BHP, said in an interview.

Investors will now watch to see if Wyloo elects to improve on BHP’s latest offer. Backed by billionaire Andrew Forrest, Wyloo has already shown it is willing to dig in for a protracted and expensive fight for Noront.

In May, Wyloo proposed buying Noront for 31.5 cents a share. BHP in July offered 55 cents. Earlier this week, Wyloo raised its bid to 70 cents.

On Wednesday, shares in Noront closed at 82 cents on the TSX Venture Exchange, seven cents above BHP’s offer, indicating that investors believe an even higher bid is coming.

The scramble for Noront is about securing long-term supplies of critical minerals, such as nickel. While much more engineering and study is needed, Noront’s Eagle’s Nest project in Northern Ontario has the potential to produce high-grade nickel that could be fed into the electric-vehicle supply chain. The industrial commodity is a key component in car batteries. BHP, like many big mining companies, is diversifying away from fossil fuels, such as coal and oil, into minerals with a lower environmental footprint, such as potash, or ones that have cleaner end uses, such as nickel for EVs.

Located 550 kilometres northeast of Thunder Bay, in the remote James Bay Lowlands of Ontario, the Ring of Fire contains promising – but unproven – deposits of nickel, copper and chromite. Noront christened the region the “Ring of Fire” because the geographical outline resembles a ring, and an employee had an affinity for the hit song of the same name by Johnny Cash. Once the centre of a staking frenzy, Noront has failed to make significant progress in developing its projects in the area over the past decade, in part because of the massive costs associated with developing mines in the region.

Noront’s mining camp is located in a swamp about 300 kilometres north of the provincial highway network, cut off from the electricity grid and internet access. BHP has developed mines in Canada in the past in extremely remote areas, including the Ekati diamond mine in the Northwest Territories. However, unlike extremely valuable diamonds, which can be flown out of mines, nickel is a bulky and heavy commodity, meaning an Eagle’s Nest mine requires a dedicated road link.

Noront had hoped for the provincial and federal governments to commit about $1.6-billion to help build the access road, but no one has committed the capital. Mr. van Jaarsveld said BHP sees significant value for shareholders over a 40- or 50-year time horizon in developing the Ring of Fire, but no decision has been made on whether the company would be willing to fund the development on its own.

“There’s still quite a few years here of studies that need to happen,” he said.

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