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Precious metal producer Sibanye Stillwater terminates R15 billion Brazil mines deal in a blow to its battery metals ambitions

Precious metal producer Sibanye-Stillwater yesterday announced that it had terminated a R15 billion deal to acquire two mines in Brazil due to a geotechnical event, which would have a ’material (effect) and (be) adverse to the business’ in a blow to its battery material ambitions. Photo: Timothy Bernard African News Agency (ANA)

Precious metal producer Sibanye-Stillwater yesterday announced that it had terminated a R15 billion deal to acquire two mines in Brazil due to a geotechnical event, which would have a ’material (effect) and (be) adverse to the business’ in a blow to its battery material ambitions. Photo: Timothy Bernard African News Agency (ANA)

Published Jan 25, 2022

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PRECIOUS metal producer Sibanye-Stillwater yesterday announced that it had terminated a R15 billion deal to acquire two mines in Brazil due to a geotechnical event, which would have a “material (effect) and (be) adverse to the business” in a blow to its battery material ambitions.

Sibanye had planned to buy Santa Rita, one of the top nickel mines, and Serrote copper mine, as well as a 5 percent net smelter royalty over potential future underground production at Santa Rita.

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The dissolving of the contract comes just over two months since Sibanye signed definitive agreements with Appian Capital Advisory in October. It said it was advised by Appian Capital Advisory that subsequent to the signing of the Atlantic Nickel SPA and the MVV SPA, a geotechnical event occurred at Santa Rita.

Appian Capital Advisory is a London-based investment company that advises two affiliated private equity funds, which in turn own the Brazilian mines.

“The company has assessed the event and its effect and has concluded that it is, and is reasonably expected to be, material and adverse to the business, financial condition, results of operations, the properties, assets, liabilities, or operations of Santa Rita,” Sibanye said in a statement.

Sibanye spokesperson James Wellsted said the event was a failure of the pit wall at Santa Rita, where the wall collapsed on to the pit. Wellsted said it was an unfortunate event as the company was looking forward to acquiring the two mines.

“We still have our strategies to acquire other mines that would help us to continue with our battery metals strategy. We wanted to acquire those mines, but it was unfortunate this event happened. Because of the negative impact, we couldn't proceed with the acquisition as we also look into value,” he said.

Wellsted said the group would continue searching for new opportunities in battery metals. Had the deal gone through, it would have been the fourth and biggest investment made by Sibanye into the battery metals sector.

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The company seeks to expand and look beyond its gold and platinum business. Battery metals form an important part of building batteries to power electric cars as well as renewable power storage applications.

Last year, Sibanye acquired lithium assets in Europe and the US and a nickel-processing facility in France.

In September, Sibanye announced that it planned to spend about R7bn to buy a 50 percent stake in Australian mining company Ioneer's Rhyolite Ridge lithium-boron project in Nevada. Rhyolite Ridge is a large, shallow lithium-boron deposit expected to be one of the first large-scale US lithium projects to enter production, anticipated in the second half of 2024.

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Sibanye also committed to purchasing 7.1 percent of Ioneer's ordinary shares for about $70 million (R1.02bn).

The deal marks Sibanye's third renewable energy addition after the acquisition of a 30 percent stake in Finnish-based lithium mine Keliber Oy and buying the Sandouville nickel hydrometallurgical processing facility, located in Normandy, France.

The failed deal comes hot on the heels of union Solidarity last week calling on Sibanye to close its Driefontein mine after a miner died. The death was reported last Wednesday following 18 employees dying at its mines last year due to various incidents.

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Solidarity's request came just as the mining company announced that it was resuming operations at one of the shafts it had closed to implement extensive safety audits and corrective measures in December.

The mining company is also facing a potential wage strike after the Commission for Conciliation, Mediation, and Arbitration issued a strike certificate to unions after wage negations collapsed late last year. The certificate permits the unions, which include the Association of Mineworkers and Construction Union, the National Union of Mineworkers, Solidarity, and Uasa, to embark on a strike at Sibanye's South African gold operations in Gauteng and the Free State and the company to implement a lockout within a 12-month period from issuance.

Sibanye shares closed 8.21 percent lower at R54 on the JSE yesterday.

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