Sibanye-Stillwater lithium

Sibanye-Stillwater has entered into the battery metals sector by inking an investment agreement with Finnish mining and chemical company Keliber Oy.

Read more: Sibanye-Stillwater unveils R6.8bn growth projects in SA

The transaction, which is expected to be implemented in March 2021, subject to the approval by the South African Reserve Bank, represents the first strategic step by Sibanye-Stillwater’s into the battery metals sector, which is complementary to its leading PGM position, with both battery metals and PGMs essential to achieving a greener future.

Keliber’s wholly owned, advanced lithium project, the Keliber project, is located in the Kaustinen region of Finland, one of the most significant lithium-bearing areas in Europe. Finland represents an attractive low-risk mining jurisdiction (top five jurisdiction in the Fraser Institute) and has developed a National Battery Strategy that outlines the objectives for the country to become a competitive, competent and sustainable player in the international battery industry. Europe is rapidly becoming a leading hub for the manufacture of batteries for electric vehicles and Keliber’s location in Finland enables efficient transport of lithium hydroxide to European customers.

The Finnish Minerals Group (FMG), which manages the Finnish State’s mining industry shareholdings, is the largest shareholder in Keliber and is focused on creating partnerships and co-investments with a view to developing the Finnish battery electric vehicle supply chain. Sibanye-Stillwater shares this vision and in partnership with Keliber, FMG and other shareholders, will progress the project to be the first vertically integrated lithium producer in Europe.

The Keliber project consists of several advanced stage lithium spodumene deposits, with significant exploration upside in close proximity to the existing project. Based on a feasibility study completed in 2019 and improved in 2020, Keliber currently has 9.3 Mt of ore reserves, sufficient for more than 13 years of operation. Planned annual production is 15 000 t of battery grade lithium hydroxide. Production is anticipated to start in 2024. The project includes the development of a chemical plant in Kokkola, approximately 50 km from the mining area, which will produce battery grade lithium hydroxide. Future lithium hydroxide production has not been committed to any offtake party.

Transaction overview

Sibanye-Stillwater will make an initial phased equity investment of €30 million, for an approximate 30% equity shareholding into Keliber. In addition a further €10 million equity issuance will simultaneously be offered to the existing Keliber shareholders, on the same terms as Sibanye-Stillwater’s €30 million investment.

This financing, together with a combination of Sibanye-Stillwater’s extensive mining expertise that will complement the skills and local knowledge of the experienced Keliber team, will ensure the continued progress of the project to a build ready phase. The €40 million investment will allow for the completion of two further detailed mining optimisation studies, permitting, metallurgical test work and detailed engineering design.

In addition, the Kaustinen region is highly prospective and further exploration work to increase the current mineral resource and reserve base will be undertaken. The initial project work will be overseen by a joint technical committee, working under the guidance of the Keliber board, on which Sibanye-Stillwater will have representation.

An updated and enhanced definitive feasibility study will be completed within 18 to 24 months, with a view to achieving successful project financing of a currently estimated €340 million by H2, 2022. The project financing would include both a debt and equity component.

In addition to the initial investment, Sibanye-Stillwater has a guaranteed option to achieve a majority shareholding in Keliber, following the completion of the updated feasibility study, should it wish to do so, by contributing further equity financing for the development of the project.

 “In line with our strategic objective of entering the battery metals industry, lithium is viewed as one of the core metals to benefit from the significant growth forecast for the electric vehicle sector,” says Sibanye-Stillwater CEO Neal Froneman.

“Our investment in Keliber represents a strategic partnership of complementary skills and capabilities and a shared vision to be a preferred provider of responsibly sourced battery grade materials for the market. The investment offers the opportunity for further geographic diversification in an attractive mining destination and the opportunity to forge long-term relationships with established lithium industry players that have a shared vision of supplying the electric vehicle supply chain.

“Together with FMG we have committed to make this a showcase ESG operation,” Froneman concludes.