Sibanye-Stillwater looks to new geographies for green-metal mines

CFO Charl Keyter said that the mine is looking to further invest in its green-metal portfolio.

Sibanye-Stillwater has announced a deal to buy the Santo Rica nickel mine and the Serroto copper mine in Brazil for $1 billion (about R15 billion). The deal forms part of Sibanye’s plans to further invest in its green-metal portfolio. 

About two years ago, Sibanye acquired the SFA research house when it realised that the green-energy metal space is an area where it wanted to further advance its strategy. “[SFA] has done research for us over the last two years on what those metals of the future will be,” said CFO Charl Keyter. “Based on that, we looked at potential targets and that’s how we ultimately ended up by narrowing it down and getting to two new mines.” 

The Santo Rica mine started operating in 2019 and ramped up through 2020. “It’s currently estimated to generate Ebitda of $53 million [about R795 million] for 2021,” Charl said. Looking at the revenue line of nickel, which is currently trading at about $9 per pound, he estimates this asset to produce at an all-in sustaining cost of about $3.50 per pound.

The Serrote copper mine’s construction was completed in May this year, and is starting to build up operations. “We expect this mine to produce an all-in sustaining cost of about $1.50 per pound.” 

Sibanye said that it will also be looking at other green-metal mines to add to its portfolio, all located outside of South Africa. “South Africa is not a big producer of lithium, but if you look at the electric drivetrain of the vehicle, lithium plays a big part specifically in that area. So some of it is just because there aren’t those metals or minerals in South Africa,” Charl explained. 

He added that it is also part of the group’s strategy to geographically diversify. “If you look at our Ebitda contribution, I would say around 70 percent is already from South Africa. So, in terms of getting a better credit rating and looking at our overall risk profile, that is partly the reason why we would be diversifying specifically out of South Africa.”