Sibanye heads for $1.2 billion legal battle in London over Brazil mining deal

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One of South Africa’s biggest miners is heading for a legal battle in the High Court in London over its decision to drop a $1.2bn acquisition of copper and nickel mines in Brazil .

Sibanye-Stillwater abruptly abandoned the purchase of Atlantic Nickel and Mineração Vale Verde from Appian Capital Advisory in January, citing a “geotechnical event” at the Santa Rita mine in Bahia, northeast Brazil.

Appian immediately hit back, saying there was no reason for Sibanye to “legally” terminate the deal, which was expected to deliver a nearly $1 billion windfall for the London-based private equity group.

Appian asserted that the geotechnical event referred to by Sibanye was a “localized” fracture that occurs in the normal course of surface mining and did not constitute a “material and adverse” event allowing Sibanye to waive the OK.

The private equity firm, led by former investment banker Michael Scherb, said on Wednesday it had notified Sibanye two weeks ago of its intention to file a claim for the purchase price of 1.2 billion in the High Court.

“We spent the last month analyzing everything. We sent technical experts to the site, we had four different legal opinions on the merits of the case,” Appian said, rejecting “the characterizations put forward by Sibanye”.

“The so-called material and adverse event was really nothing like that,” he added. “Rather, it was just 1.5 meters of slumped material in an area that was only 1% of the entire open pit mine.”

Sibanye declined to comment on the claim, but said of the geotechnical failure: “Following our assessment by our technical team and external consultants, we consider the incident to be a significant adverse event regarding the open pit mine.”

Appian says Sibanye’s technical manager visited Santa Rita a week after the “geotechnical instability” occurred and concluded in a site report that it was a “to be expected” event. in mature mining operations”.

He plans to use the legal process to find out more about Sibanye’s decision to end the deal.

“Throughout the legal proceedings, we will request all board minutes, all communications between each Sibanye employee and site visit reports,” he said.

“All the documentation will come out. The texts . . . board communication, CFO communication and that will be thoroughly analyzed to determine what is the real reason why they are not closing the deal.

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Sibanye, led by mining trader Neal Froneman, has expanded aggressively into battery metals with the aim of creating a third leg for the business alongside gold and platinum group metals.

He announced a series of deals last year and saw competition from major miners and automakers in the deal to acquire MVV and Atlantic Nickel, the vehicle that owns Santa Rita, one of the world’s largest sulfide mines. of nickel in the world.

Nickel is used in the cathodes that go into lithium-ion batteries used to power electric vehicles. Sulphide ores are best suited for this task but are increasingly difficult to find.

When news of the deal broke in October, Sibanye shares fell 5%, although they recouped some of the losses the next day when the full terms of the deal were announced.

The company is due to report full-year results on Thursday and is expected to face questions from analysts and investors about Atlantic Nickel and its battery metals strategy.

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