- Sibanye-Stillwater will pay $1 billion for two nickel and copper mines in Brazil.
- The demand for base metals has grown, thanks to the production of electric vehicles.
- Nickel is a key component in the production of lithium-ion batteries used in electric vehicles.
Acquisition-hungry Sibanye-Stillwater will pay $1 billion (R14.7 billion) for the nickel and copper mines it is buying in Brazil, as the diversified miner intensifies its move into base metals.
In a note to shareholders on Tuesday, Sibanye said it had "signed definitive purchase and sale agreements" for the acquisition of Santa Rita nickel and the Serrote copper mines in Brazil.
"The transaction is a significant additional step in Sibanye-Stillwater's ongoing strategy to position the business for continued value creation during our transition into a climate change resilient business," said CEO Neal Froneman.
The company will pay $1 billion in cash, as well as a 5.0% net smelter return royalty over potential future underground production at Santa Rita.
Located in the State of Bahia in Brazil, Santa Rita is one of the largest nickel-cobalt sulphide open pit mines in the world. The takeover will include a preliminary economic assessment-stage underground project. It was placed on care and maintenance in 2015 due to low nickel prices. But prices have surged amid high demand for nickel, driven by the production of electric vehicles.
The lithium-ion batteries used in electric vehicles include nickel.
"In line with Sibanye-Stillwater's strategy to build an operating portfolio of green metal sand related technologies, this transaction is a further meaningful step, adding two low-cost producing assets to its green metals portfolio," the company said, adding that the asset would immediately add value to the country's cash flow and earning.
Serrote is an open-pit copper mine, located in the State of Alagoas, Brazil, and developed at a cost of US$195 million.
Sibanye has in the past few months made significant investments in base metals and the company last month revealed that it had entered into a 50-50 joint venture with US firm Pioneer in a Rhyolite Ridge Lithium-Boron project.
Sibanye will fork out $560 million (approximately R8.1 billion) for its share in the project, which it says will position it for value creation and growth in the US battery metals supply chain.
Earlier in February, the firm purchased a 30% stake in a Finnish lithium hydroxide project, Keliber, for 40 million euros.
Froneman this year announced the company's intention to expand into the battery metals scene as part of its growth strategy.
