The Public Investment Corporation (PIC) has increased its stake in Sibanye-Stillwater, joining investors flocking back to the diversified miner as its potentially lucrative lithium project in Finland, backed by a consortium of lenders, takes shape.
The PIC, Africa’s largest fund manager, now owns just over 15% of the mining company, demonstrating its confidence in the miner’s long-term prospects. The transaction by the PIC comes a day after the asset manager’s CIO Kabelo Rikhotso backed platinum group metals (PGMs) to play a big role in the green economy.
Sibanye-Stillwater, one of the biggest private sector employers in SA, has significant PGM assets.
“A lot of our PGMs are used in catalytic converters, largely diesel cars to clean up the emissions. As the world becomes cleaner and we see the advent of electric vehicles, you have less demand for PGMs. However, our research tells us there is potentially a use for PGMs if you look at the hydrogen economy,” Rikhotso said.
“That is one area where if we were facing an industry that may not have a lot of use for its minerals, we think we need to find alternative sources.”
Demand for PGMs, used mostly for internal combustion engines, has come under pressure due to the rise in popularity of battery electric vehicles (BEVs), leading to softer prices.
SA, the world’s biggest platinum producer, has borne the brunt of plunging PGM prices over the past year.
In response, producers have intensified their efforts to cut costs and trim capital budgets.
The move on Sibanye-Still by the PIC — which on Wednesday reported that the value of its assets under management had breached R3-trillion for the first time — comes shortly after US financial services giant JPMorgan increased its exposure to Sibanye-Stillwater to 6%, becoming its third-largest shareholder.
Sibanye-Stillwater, headed by serial dealmaker Neal Froneman, has endured a tough two years in the wake of the plunge in PGM prices, reporting record losses.
Last month the company reported a R7bn loss in the six months to end-June, down from a R7.8bn profit in the same period a year earlier. It announced plans to restructure its mines in Montana, slashing production of palladium and platinum from the assets by as much as 45% in a bid to return the assets to profitability.
The company’s interim loss follows a 2023 full-year loss of R37bn, reported in March.
One of the group’s most promising prospects is its lithium project in Finland, which last month secured a cash injection of about R10bn via a green loan package.
Last month Froneman said the group continued to invest in the development of the Keliber lithium project and was well positioned to supply locally produced lithium hydroxide necessary for the development of the BEV sector in Europe.
“Despite the current oversupply of lithium, even under more moderate BEV growth assumptions than current market consensus, our analysis suggests that demand for lithium will continue to rise significantly,” he said.
The project aims to start sustainable production of battery-grade lithium hydroxide, using its own ore. The mine and refinery in Finland is being touted to play an important role in helping Europe reduce its reliance on China for the key battery ingredient for electric vehicles.
The EU requires all new cars sold after 2035 to have zero-carbon emissions. Besides being used in the batteries of electric vehicles, lithium batteries also power laptops and mobile phones, and is used in the glass and ceramics industry.
Sibanye-Stillwater has diversified its commodities portfolio in recent years to battery metals and processing. It has stepped up its presence in the circular economy by growing and diversifying its recycling and tailings reprocessing operations.
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