In a potentially high-stakes bet on the global energy transition and surging demand for metals used in the making of electric vehicle (EV) batteries, Sibanye-Stillwater is in talks to buy two Brazilian mining companies.
Sibanye, which has grown rapidly from a small gold mining firm spun off from Gold Fields to one of the world’s biggest miners of platinum group metals, has been looking for new income streams, acknowledging an accelerating shift towards environmentally friendly business practices amid regulatory and investor pressure.
In a deal reported by The Wall Street Journal to be worth $1bn (R14.7bn), Sibanye would buy Santa Rita, one of the world’s largest open-pit nickel-cobalt sulphide mines, and Serrote, which has just completed the construction of a copper-gold project. “If these negotiations are successfully concluded, they may have a material effect on the price of the company’s securities,” Sibanye said in a statement on Monday. “Accordingly, shareholders of Sibanye-Stillwater are advised to exercise caution when dealing in the company’s securities until a full announcement is made.”
The transaction would be Sibanye’s latest in its journey of transformation to become a green metals company.
In September, it unveiled plans to spend about R7bn to acquire a 50% stake in Australian mining company ioneer’s Rhyolite Ridge lithium-boron project in Nevada.
The deal in Brazil could be the fourth and largest investment by Sibanye in the battery metals sector. Earlier this year, the company announced a €40m (almost R700m) investment agreement with the Keliber lithium project in Finland, as well as plans to acquire the Sandouville nickel refinery in France for €65m.
Mining companies across the world have ramped up their investments in raw materials for EVs with demand for nickel, a key battery chemical, forecast to grow 19-fold between 2020 and 2040 if the world meets the Paris climate goals, according to the International Energy Agency, the Paris-based body that represents energy consumers.
The more traditional use of nickel is in the processing of stainless steel for kitchen appliances and utensils.
Last week, BHP Group sweetened a takeover offer for Noront Resources, trumping a competing bid from Wyloo Metals and underlining its determination to become a substantial supplier of the EV battery metal.
Analysts expect shortages of copper, cobalt, nickel and other industrial materials that are needed for the shift to a low-carbon world.
Nickel prices have almost doubled over the past five years, having hit a decade high above $21,000 a tonne on October 20, before pulling back some of the gains to just under $20,000.
London-based private equity mining fund Appian Capital Advisory bought the two mines that are the focus of Sibanye’s interest, acquiring the Santa Rita mine out of bankruptcy in 2018 and restarting production the next year. The mine has an estimated annual processing capacity of 6.5-million tonnes of ore, according to Appian’s website.
The Serrote copper and gold mine in eastern Brazil is described by Appian as less likely to involve a financial loss, having completed its construction, and is located near a large local labour force and a port.
The project is forecast to produce about 20,000 tonnes of copper equivalent annually over 14 years.
motsoenengt@businesslive.co.za
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