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Sibanye-Stillwater bets big on battery metals with extra Finnish investment

Neal Froneman, chief executive of Sibanye-Stillwater, says the Keliber project will be the first mining and metallurgical operation in Europe to deliver high-quality, low-cost lithium hydroxide with a low-carbon footprint and will be ideally placed to deliver crucial metals into the growing European battery industry. Picture: Courtney Africa (ANA)

Neal Froneman, chief executive of Sibanye-Stillwater, says the Keliber project will be the first mining and metallurgical operation in Europe to deliver high-quality, low-cost lithium hydroxide with a low-carbon footprint and will be ideally placed to deliver crucial metals into the growing European battery industry. Picture: Courtney Africa (ANA)

Published Jul 1, 2022

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Sibanye-Stillwater has followed up on its chief executive Neal Froneman’s stated strategy to make a big play in electric battery metals after announcing plans to raise its interest in Finland-based Keliber Oy, a battery metals and chemicals company.

Keliber owns a lithium hydroxide project in the Kaustinen region of Finland. The project is gearing up production of battery grade lithium hydroxide from its own ore.

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After an initial 30.2 percent investment into Keliber last year, Sibanye has now revealed plans to ramp up its interests in the Finnish battery metals company to 50 percent by way “of a phased-equity investment,” the company said.

The new investment is subject to approvals from the South African Reserve Bank and minority shareholders in the Finnish company.

In March this year, Froneman said “battery metals and PGM will provide a significant green portfolio” for the company. He said the company anticipated that governments across the world would fast-track legislation to “take account of low demand for electric vehicles”.

Global campaigns and pressure to move away from fossil fuels has intensified the use case for electric vehicles across the world, providing impetus for battery technology and related metals.

Diversification into battery metals is also a significant bet for Sibanye which has faced intensive labour volatility across its South African gold mines. The company is also facing steep labour costs at Stillwater in the US, with Froneman confirming that this could affect expansion plans there.

This could explain why Sibanye is aggressively pursuing expansion of its interests in Keliber, after it proposed to raise its shareholding in the company further to 80 percent.

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“The Keliber project will be the first mining and metallurgical operation in Europe to deliver high-quality, low-cost lithium hydroxide with a low-carbon footprint and will be ideally placed to deliver crucial metals into the growing European battery industry,” said Froneman yesterday.

In December, Keliber announced a 31 percent increase in mineral reserves at the Finnish project, while “there has also been a significant improvement in the fundamental outlook” for the lithium market.

With a projected production of 15 000 tonnes of lithium hydroxide per year, Keliber is aiming to be a top integrated lithium producer in Europe. For Sibanye, Finland provides an opportunity for an attractive, low-risk mining jurisdiction, it said.

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Subject to approvals by minority shareholders, Sibanye has tabled a total consideration of €196 million (R3.3 billion) subsequently; the maximum possible total cost of a planned capital raise for the lithium project to Sibanye-Stillwater is around €104m.

It will, however, be dependent on “the extent to which minorities accept the voluntary offer made by Sibanye-Stillwater and the extent to which minorities” participate.

This brings the total cost of the transaction for Sibanye to €446m, excluding transfer taxes.

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“Conventional debt facilities are currently being advanced with third party lenders to at least match the €250 million equity contribution to fund construction of the project. Sibanye-Stillwater anticipates that all aspects of the various transactions described above will be completed by February 13, 2023, being the effective date,” the company said.

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