Sibanye-Stillwater moves for control of Finland’s €446m Keliber lithium project

SIBANYE-Stillwater is to exercise a control option in the proposed Keliber lithium project in Finland that will eventually take its shareholding in the venture to 80%.

The South African platinum group metals producer currently has a 30% stake, held through Keliber Oy which owns the Keliber project in Finland’s Kaustinen region.

“We like the project,” said James Wellsted, senior vice-president of corporate affairs for Sibanye-Stillwater. “It has all the characteristics we want: a stable jurisdiction that is close to end-markets in Europe.”

The project is scoped to supply about 15,000 tons a year of lithium hydroxide which is used in the manufacture of lithium-ion batteries for electric vehicles.

Sibanye-Stillwater bought its initial stake in Keliber Oy in February last year at a cost of €40m. In terms of an option agreement it will lift its holding to 50% plus a share and then make an offer for minority shareholders with the Finnish Minerals Group, a government-owned company, retaining a stake.

Post a successful offer to minorities, Sibanye-Stillwater will have 86% of Keliber Oy but it will rebalance the shareholding such that FMG will take a 20% stake to Sibanye-Stillwater’s 80% holding by means of a joint capital raising effort.

In exercising the control option, Sibanye-Stillwater will lift its total investment to €146m. Instructively, the cost of the option reflects a 30% increase in Keliber’s reserves following additional drilling since last year as well as the improvement in lithium hydroxide prices since the initial stake was made: increasing to about $80,000 per ton from $11,000/t.

Analysts believe the globe is heavily under-invested in so-called ‘precursor minerals’ – processed products that can be directly supplied to electric car manufacturers. As a result, prices for key metals have undergone an extraordinary appreciation in the past 12 to 24 months as the scope of the under-investment is becoming clear.

If all minorities accept Sibanye-Stillwater’s offer, the group’s total investment will increase to €196m. It will then make a further equity contribution of €104m as per the capital raise taking its total investment share of the €446m investment to €250m. FMG will fund the balance of the project by following its rights.

Wellsted said Sibanye-Stillwater believed that the Keliber investment had strategic importance owing to the possibility of other lithium resources regionally.

Finland has declared its intention to become a supplier of lithium to the lithium-ion battery market in Europe. The country’s preponderance of hydropower means its product commands a green premium.

“Conventional debt facilities are currently being advanced with third party lenders to at least match the €250m equity contribution to fund construction of the project,” said Sibanye-Stillwater in a statement today.

The announcement today represents a shot of good news for the company which this year pulled out of copper and nickel projects in Brazil. This precipited a legal suit by the seller, Appian Capital Advisory which is claiming about $1.2bn in damages in a UK court hearing.

The Keliber project has an effective date for completion of February 13, 2023. Shares in Sibanye-Stillwater shed 1.23% in early trade on the Johannesburg Stock Exchange taking its year-to-date performance to -16,45%.