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Sibanye-Stillwater confirms talks to acquire nickel and...

Business Maverick

Business Maverick

Sibanye-Stillwater confirms talks to acquire nickel and copper mines in Brazil that may cost around $1-billion

Sibanye-Stillwater CEO Neal Froneman speaks during a company presentation in Cape Town, South Africa, on Tuesday, Feb. 7, 2017. (Photo: Halden Krog/Bloomberg via Getty Images)

Diversified precious metals producer Sibanye-Stillwater has confirmed a Wall Street Journal report that it is in talks regarding the acquisition of the Santa Rita nickel and the Serrote copper mines in Brazil. This would be the latest acquisition by Sibanye's CEO and arch deal-maker Neal Froneman as he targets the battery metals driving the electric vehicle revolution. And according to the WSJ, the price tag will be around $1-billion. 

Sibanye issued a cautionary statement on the JSE Monday morning which was clearly in response to the Wall Street Journal (WSJ) report.

“… the company has entered into negotiations with affiliates of funds advised by Appian Capital Advisory LLP, regarding the acquisition of both the Santa Rita nickel and the Serrote copper mines, located in Brazil. If these negotiations are successfully concluded, they may have a material effect on the price of the company’s securities,” Sibanye said.

Sibanye, launched almost a decade ago as a Gold Fields’ spin-off operating deep-level, labour-intensive gold mines in South Africa, has since diversified its asset base and geographical reach into platinum group metals (PGMs) and battery metals.

“The South Africa-based miner would acquire Atlantic Nickel, which operates the Santa Rita mine, one of the world’s biggest open-pit nickel sulfide mines, and Mineracao Vale Verde, which is developing a copper-and-gold mine,” the WSJ said, citing people familiar with the matter. It put the price tag, including debt, at around $1-billion or close to R15-billion. 

Nickel is a key ingredient in the metals mix for electric vehicle (EV) batteries. Sibanye has a healthy balance sheet, is generating good cash flows from its PGM operations and has an option to refinance an existing $350-million corporate bond on more favourable terms.  

Such a deal would also likely raise the ire of some of the unions — notably the National Union of Mineworkers (NUM) and the Association of Mineworkers and Construction Union (Amcu) — which are in wage talks at the moment with Sibanye’s gold division.

Both unions have criticised Sibanye for making overseas acquisitions while offering wage hikes in its gold sector that are just in line with or lower than current inflation rates. Sibanye says it does not cross-subsidise its divisions and Froneman has a reputation for staring down labour. 

Froneman also has a reputation for cutting deals and if this one goes through, it will almost certainly not be the last. The Sibanye juggernaut with Froneman at the helm continues to roll along. DM/BM



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