Sibanye-Stillwater will have to compensate UK private equity firm after a court ruling that threatens to worsen the strain on a company already reeling from tumbling platinum group metal (PGM) prices.
The judgment ends the first leg of the dispute between Sibanye and UK-based Appian Capital Advisory, with the second leg set for next year.
The dispute arose in 2022 when Sibanye, currently valued at just over R54bn on the JSE, walked away from a $1.2bn (about R21bn) deal to buy the private equity firm’s shares in Atlantic Nickel and Mineração Vale Verde, the respective owners of the Santa Rita nickel and Serrote copper mines in Brazil.
At the time Sibanye, SA’s largest employer in the private sector, cited a “geotechnical incident” at Santa Rita, which it deemed significant enough to undermine the commercial merits of the deal and justify terminating the agreement.
Appian rejected Sibanye’s assessment that a “material adverse change” clause had been triggered, arguing a failure of part of the wall of the open-cast mine was minor, and took the matter to court.
The UK court found Sibanye liable for damages, which will be quantified at a trial scheduled for next year.
The ruling couldn’t come at a worse time for Sibanye CEO Neal Froneman. The company is grappling with a plunge in the prices of PGMs — the main reason for it reporting a R7bn loss in the first half of 2024 and a R37bn loss for all of 2023.
Sibanye shares slumped on Thursday in reaction to the latest news, shedding more than 8% to R17.61 — an astonishing change of fortunes for the stock that fetched about R75 just over two years ago.
The loss in value over the years mirrors an industrywide decline that has seen larger rival Anglo American Platinum removed from the JSE’s blue-chip top 40 index.
Appian, founded and headed by Taiwan-born Michael Scherb, has offices in Brazil, New York, Toronto, Perth, Montreal, Mexico City, Lima, Johannesburg and Dubai. It said the court’s decision vindicated its view that Sibanye’s decision to terminate their agreement over an “insignificant and small” geotechnical event at Santa Rita in 2021 was legally flawed.
“Today’s ruling dictates that Sibanye-Stillwater is liable to compensate Appian for all the damages which result from Sibanye’s unlawful termination of the $1.2bn transaction. Appian will seek to recover these losses in full, including the significant interest that would have accrued since January 2022,” it added.
Not wilful
“The hearing to deal with the quantum of these damages will be tried in November 2025. If Sibanye-Stillwater cannot pay in full the damages awarded to Appian in the quantum trial, Appian will pursue all enforcement options.”
While the UK court found Sibanye wanting in its reasons for terminating the share purchase agreement as a result of the geotechnical event, it held that the miner hadn’t done so wilfully.
Sibanye didn’t comment on the ruling, but said its stance on the matter of damages “is that Appian could have sold the Santa Rita and Serrote mines in Brazil to another purchaser for a similar purchase price after Sibanye-Stillwater terminated the SPAs [share purchase agreements] and therefore cannot recover any loss it has suffered from Sibanye-Stillwater.
“The judgment notes that Appian received multiple offers for the mines after Sibanye-Stillwater terminated the SPAs. Accordingly, Sibanye-Stillwater will continue to defend the claim vigorously at the quantum trial in November 2025.”
Sibanye was originally a gold-focused miner but diversified its portfolio with the purchase of PGM assets. Since 2019 it has increased its exposure to so-called green metals, which are used in low-carbon technologies. These include metals such as nickel that are required for batteries in electric vehicles.
Update: October 12 2024
The previous version of this article incorrectly said Sibanye may be liable to pay $1.2bn. That is incorrect as this amount was the value of the entire deal Sibanye walked away from. Also, the last peak in Sibanye's share price in 2022 was R75. We regret the errors.
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