Weeks after terminating a green metals acquisition in Brazil owing to a geotechnical event that would materially affect the performance of the mine, Neal Froneman’s Sibanye-Stillwater has confirmed it has purchased a nickel processing facility in France for around R1.5bn. This is small compared to the terminated agreement in Brazil, which was valued at approximately R15bn. This is the forth green metals acquisition, a diversification strategy that Froneman is steadfast on regarding the future for the world’s largest precious metals producer.
In an interview with the Financial Mail, Froneman referred to the termination of the Santa Rita deal as “super discipline”, outlining that the geotechnical event will take years off the mine’s lifespan. He isn’t concerned about the sellers’, Appian Capital Advisory, decision to take legal action against the miner, citing that the geotechnical event is not material and happens during the ordinary course of open-pit mining. Froneman says Sibanye’s lawyers have examined it extensively and they will now be turning their attention to another acquisition to add to its green metals portfolio.
Sibanye-Stillwater’s green metals portfolio includes Sandouville, a nickel processing facility in France; Rhyolite Ridge, a lithium-boron project in the US; New Century Resources, tailings management and rehabilitation company in Australia; and Keliber, battery-grade lithium hydroxide in Finland. All of these transactions took place in 2021, showing Froneman’s intent to enter the industry. Its green metals interests are still negligible in value when compared to its core precious metals and gold operations. The prospective acquisition of Santa Rita and Serrote mines in Brazil as its first aggressive corporate activity within the industry was not to be. Lithium, nickel and copper – the assets Froneman is looking to acquire – are primary components in the manufacture of electronic vehicle batteries.
There has been some pushback from shareholders despite Froneman’s reputation as one of if not the best dealmakers in South Africa. There’s been a lot of hype about assets that tick environmental, social and governance mandates, which has inflated asset values. However, there’s been a correction in these assets as the world tries to balance the need to move to renewables, with a heavily skewed demand-supply imbalance for energy given supply constraints. Shareholders think Froneman may overpay for green metal assets, and when questioned on these concerns, the mining boss was unconcerned.
Given Froneman’s conviction on green metals, Sibanye’s healthy balance sheet and a $1bn deal that just fell through, one cannot help but suspect a significant acquisition is around the corner.
Read also:
- Did Neal Froneman get cold feet on Sibanye-Stillwater’s $1bn green metals acquisition? – Peter Major explains
- Mining guru Peter Major casts doubt over Sibanye-Stillwater’s ‘green’ metals acquisition
- Financial Times Perspective: Sibanye outbids global majors in 4th battery metals bet of 2021
