LAWYERS for Sibanye-Stillwater had studied a decision “every which way” to withdraw from the acquisition of base metal assets in Brazil and that the company was confident it had no questions to answer, said the firm’s CEO Neal Froneman.
“We didn’t take the decision lightly. We have substantial open cast expertise in the group which we brought in because of our move into these areas,” said Froneman in an interview with the Financial Mail.
On January 24 Sibanye-Stillwater withdrew from a $1bn offer to buy the Santa Rita nickel mine and Serrote, a copper project that is ramping up to full production. Both mines were preivously in mothballs.
Sibanye-Stillwater announced its decision to withdraw from the deal following a “geotechnical event” at Santa Rita, thought to be the collapse of an open pit wall. The seller of the mine, Appian Capital Advisory said the event was a temporary issue for Santa Rita, but Sibanye-Stillwater said it would reduce a six year life of mine asset by two to three years.
Calling off the deal was a demonstration of “super discipline”, said Froneman. “There was a material event and our lawyers have examined it in every which way and we are not going to battle on with things like that.”
“We move on and continue looking,” he said of Sibanye-Stillwater’s strategy to diversify into the production of battery metals. “Our view is there’s still substantial upside on the commodity prices. We are only just seeing recognition of severe shortages of nickel and lithium. We continue to look at opportunities and we will be very selective.”
The Sandouville facilities include a hydrometallurgical nickel refinery with a production capacity of 12,000 tons a year of high-purity nickel metal, 4,000 tons annually of high-purity nickel salts and solutions, and around 600 tons per annum of cobalt chloride.
Sibanye-Stillwater’s strategy has attracted some criticism, however, including comments that the company had offered to pay too much for the Santa Ria and Serrote mines.
“I’m not sure if Sibanye overpaid or not as people have been saying, but I think the larger issue is that the market isn’t that enthusiastic on the whole metals diversification strategy,” said Arnold van Graan, at Nedbank Securities.
“Even people who completely bought into the idea of battery metals taking over the world, were a bit unenthusiastic about Sibanye-Stillwater’s strategy.”
Prior to making the bid for Serrote and Santa Rita, Sibanye-Stillwater racked up $1bn in spend having splashed out on lithium projects in Finland and the US, as well as Sandouville.