HAVING taken a leap of faith in 2015, it’s clear that commodities entrepreneur, Ruli Diseko, isn’t going to be rushed into hasty decisions today.
His Thakadu Group recently announced commissioning of a $20m (R298m) nickel sulphate refinery which is located on the premises of Sibanye-Stillwater’s Marikana platinum group metal (PGM) facilities, near Rustenburg in the country’s North West province.
Nickel sulphate is a refined form of the nickel metal that’s of interest to manufacturers of electric car batteries. In fact, one of Diseko’s first calls after deciding to make the investment in 2016 was to Tesla, the US carmaker. The company liked what Thakadu was hoping to offer, and it provided an early signal to Diseko that he was on the right track.
Soweto-born Diseko, a UCT commerce graduate, began working life as a commodities trader before joining Lonmin, the former PGM miner. By the time Sibanye-Stillwater concluded its all-share takeover of Lonmin in 2019, Diseko had already decided to strike out on his own, leaving Lonmin and betting all he had to finance R6m of research work by Mintek, the government-owned research institute, into what became Thakadu’s proprietary process technology.
It’s handy, though, that Sibanye-Stillwater is Thakadu’s new neighbour given the mining firm’s interest in acquiring battery metals as part of its diversification plan. It makes Thakadu, via its subsidiary, Thakadu Battery Materials, an obvious target for the miner.
Both Thakadu and Sibanye-Stillwater know that the market for nickel sulphate is – potentially-speaking – enormous.
According to Roskill, a specialist metals and market research company, nickel sulphate consumption has grown 20% a year since 2014 owing to electric vehicle battery growth. Contained nickel demand is expected to total 2.6 million tons annually by 2040 compared to 90,000 to 100,000 tons a year today.
Sibanye-Stillwater has already acted on its interest in battery metals announcing in February a R700m toe-in-the-water acquisition of shares in a Finnish lithium developer which is, in turn, developing a R6bn lithium mine over which Sibanye-Stillwater has a control option.
Diseko, however, says it’s not a given his company is a natural fit with Sibanye-Stillwater, or any other mining firm for that matter. “What we have is proprietary technology. We are a process and technology business rather than an earth-mover,” he says in an interview with Finweek following news the nickel sulphate refinery will this year produce 16,000 tons a year of nickel sulphate on the way to 25,000 tons annually at full pelt.
He’s also not overly eager to jump into bed with a particular buyer of nickel sulphate, though they abound in number. Notwithstanding OEM’s interest in Thakadu’s product, the main markets are in South Korea, Japan and China. The North American and the European market will come into the frame in time, but for now there’s enough interest in the Asian market to tempt Diseko to think bigger.
The plan, whilst building up production from the refinery, is to build both geographic and product diversity. Cobalt, another of those battery metals, is produced by Thakadu Battery Materials, as a by-product of nickel sulphate, but there’s an ambition to move into larger scale production of that particular metal, as well as other battery metals.
Diseko also wants to expand his company’s operational footprint into Southern Africa and North America. His ambition begs the question of how this may be financed. Currently, the company is financed by the IDC and a group of high net worth investors, whose loyalty he hopes to reward with dividends, in time.
“We’re at an exciting place where we have many options. An offshore listing would be in keeping with our plans to internationalise,” he says. Sadly, a Johannesburg debut isn’t in the offing should Thakadu opt to go public. “The capital pools are different here.”
And instead of considering his company prey for Sibanye-Stillwater’s battery minerals strategy, Diseko has merger and acquisition plans of his own. “We want to leverage our first mover advantage. We want to have a suite of prospects in southern Africa and North America. We see the company doing this in short order,” he says.
Diseko says the market should expect more action in the next 12 months. It might, though, come sooner.
Speaking to Miningmx, Neal Froneman, CEO of Sibanye-Stillwater, had this to say of Thakadu: “You can produce nickel metal you can sell; however, if you get to produce high quality nickel sulphate … that’s what the battery manufacturers want and it gives you a competitive edge”.
Froneman wants to develop ‘exposure’ to these companies by first taking investment-sized stakes in the businesses and bringing its balance sheet into play by financing expansions the companies couldn’t ordinarily provide alone.
“By associating ourselves with those kinds of companies [such as Thakadu] is exactly the type of association I’m talking about. That’s exactly the type of partner you want to work with and develop those relationships,” said Froneman, who declined to say whether Thakadu was specifically in the company’s sights.