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Sibanye-Stillwater leans heavily on battery market to minimise losses
23 Aug 2024
Sibanye-Stillwater announced several significant developments this week ahead of its upcoming interim results. The announcements were focused on strategic initiatives in green energy, battery metals and diversification. A key component is securing a €500m green loan for its Keliber lithium project in Finland, which is expected to start production in 2026 and produce 15,000 tons of battery-grade lithium per year. The initial estimated cost was €656m with a 28% return rate.
Keliber is a potential cornerstone project in Sibanye's transition to becoming a critical minerals global power.
The loan financing facility will cover the remaining capital expenditure needed for the construction and development of its three lithium mining, processing, and refining facilities in Finland: Kaustinen, Kronoby, and Kokkola.
Keliber is expected to be Europe’s first mine-to-market lithium producer and relieve much of the ESG pressure associated with the critical mineral.
This facility not only strengthens the company’s financial flexibility but also ensures that available group cash and debt facilities remain allocated to operational and corporate needs.
The loan is structured in three instalments: a €250m Export Credit Agency (ECA) guaranteed tranche, a €150m from the European Investment Bank (EIB), and a €100m syndicated commercial bank payment.
“We are delighted with the strong support from a diverse group of financiers, including the European Investment Bank and Finnvera,” said Sibanye CEO Neal Froneman.
“The funding package provides cost-effective, long-term funding for the balance of the Keliber project’s funding needs and significantly improves group liquidity.”
French nickel
Sibanye is also advancing its Sandouville nickel refinery in France, with plans to transition it into a producer of pre-cursor cathode active material (pCAM) for the European battery market.
This follows a successful scoping study and the ongoing pre-feasibility study (PFS) to assess the viability of producing pCAM through a new, in-house developed, chloride-based process.
We are excited to be progressing with our battery metals strategy of developing downstream exposure to Europe’s battery metals value chain.
The new process has achieved successful laboratory-scale production of pCAM at Sandouville, and the patent application has been filed.
Sibanye is reducing losses by ending a major commercial supply agreement by late 2024.
The company is also building a pilot plant at the refinery site, with testing expected to begin in September 2024.
“We are excited to be progressing with our battery metals strategy of developing downstream exposure to Europe’s battery metals value chain,” explained Froneman.
Strengthening the balance sheet
Besides cosying up to the EU battery value chain, back home Sibanye has refinanced and increased its revolving credit facility from R5.5bn to R6bn, set to mature in August 2027.
Along with a recent R1.8bn gold prepayment deal, this move enhances the company's financial stability and liquidity.
“The gold prepayment is a strategic choice that boosts our liquidity and strengthens the balance sheet while keeping leverage for potential gold price increases,” said Froneman, stressing the importance of these actions.
We're also pleased to have refinanced and upsized the rand RCF, showing strong confidence and support from our South African lenders.
Bracing for impact
These announcements are crucial for emphasising the company's strategic shift towards green energy and its involvement in Europe's battery metals market, especially given the generally anticipated interim results disappointment.
According to Finch Ratings, currently Sibanye's profitability is low. This assessment has maintained the negative outlook for the year.
Significant cash flow from the South African PGM business has recently fuelled the group's growth. However, despite large investments in battery metals diversification, falling PGM prices are increasing leverage in 2024.
Sibanye expects to produce 440,000-460,000 2E ounces in its US PGM operations, 1.8-1.9 million 4E ounces in South African PGM, and 627,000-659,000 ounces in South African gold.
