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Sibanye-Stillwater ditches $1bn Brazil copper and nickel deal

The Santa Rita nickel-cobalt mine in Brazil’s northeastern state of Bahia. (Image courtesy of Atlantic Nickel.)

Sibanye-Stillwater (JSE: SSW) (NYSE: SBSW) has walked away from a $1 billion deal to acquire the Santa Rita nickel and Serrote copper mines in Brazil, which would have boosted its growing battery metals portfolio.

The South African miner said the decision followed a “geotechnical event” at Santa Rita, one of the world’s largest nickel-cobalt sulphide open pit mine, which the company thought it to be “material and adverse to the business.”

The deal with Appian Capital would have seen Sibanye-Stillwater buying operating companies Atlantic Nickel, which owns the Santa Rita mine, and Mineracao Vale Verde (MVV), which is developing the Serrote mine. It would have also given it a 5% net smelter royalty over potential future underground production at Santa Rita.

The acquisition would have also been Sibanye-Stillwater’s fourth battery metal investment in less than a year. In September, the company grabbed a 50% stake in ioneer Ltd’s (ASX: INR) lithium-boron project in Nevada.  

The company, however, will continue to grow its battery metals portfolio, it said in the statement.

Appian Capital reacted by saying that Sibanye-Stillwater had no basis to lawfully terminate the agreement to purchase the Brazilian assets. It noted the “geotechnical event” cited by the company referred to a localized fracture that occurs in the course of open pit operations. 

“To remedy the condition of the area in question, some amount of additional waste will need to be mined earlier in the mine plan which equates to less than 1% of the mine’s volume over a 34 year mine life. Appian does not agree that this constitutes a material adverse event,” an Appian Capital spokesperson said in an emailed statement.

Appian added it was assessing all of its legal options and will take all necessary action to enforce its legal rights.

Costly acquisitions ahead

Analysts believe Sibanye-Stillwater faces the risk of costly acquisitions as battery metals prices are hovering around record highs.

“Given where nickel, copper and lithium prices sit today, its going to be a lot more difficult to find cheaper assets,” Mandi Dungwa, an analyst at Kagiso Asset Management in Cape Town, said. “Clearly those metals are worth a whole lot more given where we are in commodities prices than two years ago.”

Nickel’s usage has grown over the past two years in lithium-ion batteries. The accelerated roll-out of EVs is making certain types of the metal popular among investors, as it can be processed into battery precursor materials.  

The more traditional use of nickel is in the processing of stainless steel for appliances and utensils.   

Analysts expect shortages of copper, cobalt, nickel and other industrial materials needed for the shift to a low carbon world, partly due to underinvestment in the mining sector and accelerating demand. 

(With files from Bloomberg)