Sibanye Stillwater Ltd. agreed to pay $1 billion in cash for nickel and copper mines in Brazil, in a deal that highlights the race to supply battery metals to the booming electric-vehicle sector.
Nickel, traditionally used to make stainless steel, is a key component in lithium-ion batteries and a favorite talking point of Elon Musk, who appealed to producers last year to “please mine more nickel.” That’s sparked a fight over nickel mines as the industry gears up for the green transition.
Flush with cash from a rally in the rhodium and palladium it mines in South Africa and Montana, Sibanye has joined the push into battery metals. Chief Executive Officer Neal Froneman has already acquired lithium assets in Europe and the US this year and the purchase of Santa Rita — one of the largest nickel-cobalt sulphide mines in the world — furthers his ambitions.
“This transaction is a further meaningful step — adding two low-cost, producing assets to its green metals portfolio,” Johannesburg-based Sibanye said in a statement Tuesday.
Sibanye climbed as much as 3.9% in Johannesburg trading, after dropping 5.1% on Monday, when the company said it was in talks to buy the mines.
Sibanye is gaining “immediate exposure to the tight, underlying metal markets,” RMB Morgan Stanley analysts said in a note. The planned spending on deals doesn’t affect the company’s ability to pay dividends, although it could result in Sibanye moving into a net debt position, they said.
Santa Rita, along with the purchase of the Serrote copper mine, offers “substantial” long-term potential, Sibanye said. The deal to acquire the mines from affiliates of funds advised by Appian Capital Advisory LLP also includes a smelter royalty valued at $218 million, it said.
“The transaction also highlights the strong and growing demand for decarbonization commodities,” Michael Scherb, CEO and founder of Appian, said in a statement.
Citigroup Inc. and Standard Chartered Plc acted as financial advisers to Appian, while Moelis & Co. advised Sibanye.
Since its formation in 2013, after Gold Fields Ltd. spun off its oldest South African gold mines, dealmaking CEO Froneman has transformed Sibanye through the acquisition of platinum-group metals assets from Zimbabwe to the US Now he wants battery metals to contribute about a third of Sibanye’s earnings within four years as the transition to a greener economy spurs demand.