Sibanye-Stillwater says “downstream exposure” will be part of battery metals deal

Neal Froneman, CEO, Sibanye-Stillwater

NEAL Froneman put meat on the bones of Sibanye-Stillwater’s plans to enter the battery metals industry, saying a transaction would expose it to the downstream market, but would not involve a major transaction that typifies its growth so far.

“The transition into a platinum group metals (PGMs) producer was designed to be a full, quick step process, and material in terms of the size of the PGM business we wanted to create,” he said, referring to the firm’s R4.5bn takeover of Lonmin last year or the earlier acquisition of assets from Anglo American Platinum (Amplats).

The company is now the world’s largest platinum group metal producer. Including its gold mines, it employs about 80,000 people and is the second largest employer in South Africa after the country’s government.

“Battery metals is going to be very different. It is going to be far more strategic, and it is going to require partnerships” even though the firm had spent 18 months sizing up potential acquisitions, said Froneman.

“It will not be same type of strategy where we aim to be number one, two or three in battery metals. It will be far more selective. It is probably will involve quite a lot more downstream exposure for supply chain reasons.”

Froneman was speaking today at the Financial Times Commodities Mining Summit.

There was also a possibility the company could dovetail a new investment with a recently stated interest in growing the firm’s gold business. Currently, Sibanye-Stillwater mines all of its gold from South Africa, but Froneman has been critical of the country’s investment climate, saying he couldn’t sanction further investments there.

But the occurrence of gold with copper – a metal Froneman listed as a metal of interest – in geologies known as porphyries, could open up an avenue to invest internationally in a precious metal other than PGMs. Sibanye-Stillwater bought US-based miner Stillwater Mining in 2018 for $2.2bn.

Listing other metals in which Sibanye-Stillwater was interested, Froneman mentioned lithium, nickel, and copper. “You don’t have to stretch your mind too far from gold/copper type relationships. Having some exposure to copper is important. Cobalt is interesting but not sure it’s part of the long-term.”

Sibanye-Stillwater would “make moves” in the next six to nine months.

The company was on the end of harsh treatment at the time of the Stillwater bid because it suspended dividend payments. The company recently reinstated the dividend and has since said it would not sacrifice shareholder payouts for growth in the future.