Australian Shareholders’ Association calls for dumping of IGO directors over Western Areas wipeout

Australia’s biggest lobby group for mum and dad investors wants IGO chair Michael Nossal and other directors dumped from the miner’s board over their role in the disastrous takeover of Western Areas.
The Australian Shareholders’ Association is recommending its members vote against the re-election of Mr Nossal, Santos chair Keith Spence and Xiaoping Xang at next month’s annual general meeting, saying they need to take responsibility for the $1.3b lost on the Western Areas deal.
“All three of these directors were on the board at the time that the first steps were taken to take over Western Areas,” the ASA said in a report setting out its voting recommendations and posted on its website.
“They approved and supervised the due diligence work prior to making the final offer unconditional.
“Their collective responsibility for what has turned out to be a disaster for shareholders is the reason they should have resigned their office.
“We believe that shareholders should dismiss them.”
However, without unanimous opposition from major investors, the trio of directors appears likely to survive thanks to the qualified support of the influential proxy advisers that guide the voting of institutional shareholders.
The re-elections are believed to have broad-based support from the proxy advisers, though IGO’s remuneration report and a resolution to increase the board’s fee pool are facing selective opposition.
One proxy advisory group insider suggested he was prepared to give IGO the benefit of the doubt given changes to the company’s board and management since the 2022 acquisition of Western Areas.
The takeover is arguably the worst negotiated in recent years, with IGO writing off the $1.3b it paid for the nickel miner after higher than forecast operating and capital costs, combined with falling metal prices, scuppered the value of the business within a year.
An independent review commissioned last year and completed in early 2024 by the IGO board found the transaction was littered with failures across pricing, due diligence and integration.
The review said the takeover was overvalued because of flawed assumptions and marked by poor due diligence and risk assessment. The financial damage was further exacerbated by “limited” information and pre-project planning around the integration of Western Areas’ Cosmos nickel mine, near Leinster, which has since been mothballed with the loss of hundreds of jobs.
Chairman Michael Nossal told angry shareholders at the 2023 AGM that “we all have to take accountability together and wear the consequences of that”.
The board remains unchanged since then, though Mr Nossal told shareholders in a limited reference to the deal in the 2024 annual report in August that IGO had made “substantive changes to processes, safeguards and risk management” as a result of the review, which has not been made public.
The ASA said in its voting intentions report that it had lost confidence in the board, noting that IGO will need to develop another project when the Nova nickel mine in WA closes in the next couple of years, “or else the company will revert to a shell with an investment in the (Tianqi lithium) joint venture and a few exploration projects”.
“We do not trust in the collective ability of the directors in office at the time of the Western Areas takeover to make a good decision on such a project,” it said.
The ASA is also opposing the election of new IGO director Marcelo Bastos, suggesting the board is already too big given the company operates only one mine.
In addition, it will vote against a resolution seeking to increase the ceiling on annual cumulative board fees by $250,000 to $2 million.
“If the directors who approved the 2022 acquisition of Western Areas resign or are dismissed, the existing pool will be more than adequate,” the ASA said.
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