One of South Africa’s biggest miners is heading for a legal battle at the High Court in London over its decision to ditch a $1.2bn acquisition of copper and nickel mines in Brazil.
Sibanye-Stillwater in January suddenly abandoned the purchase of Atlantic Nickel and Mineração Vale Verde from Appian Capital Advisory, citing a “geotechnical event” at the Santa Rita mine in Bahia, north-eastern Brazil.
Appian immediately hit back, saying that there was no basis for Sibanye to “lawfully” terminate the deal, which was set to generate a near billion-dollar windfall for the London-based private equity group.
Appian claimed that the geotechnical event referenced by Sibanye was a “localised” fracture that occurs in the normal course of open pit mining and did not constitute a “material and adverse” event allowing Sibanye to walk away from the deal.
The private equity firm, which is run by former investment banker Michael Scherb, said on Wednesday that it had notified Sibanye two weeks ago of its intention to file a claim for the $1.2bn purchase price in the High Court.
“We have spent the last month analysing everything. We have sent technical experts to the site, we have had four different legal opinions on the merits of the case,” Appian said as it rejected “the characterisations put out by Sibanye “.
“The so-called material and adverse event, really wasn’t anything of the like,” it added. “It was rather just 1.5 metres of slumping material in an area that was only 1 per cent of the entire open pit.”
In a statement Sibanye said: “We reject both Appian’s apparent strategy, and the substance of its comments. Its public characterisation of the geotechnical event experienced at Santa Rita is both superficial and wrong.”
It added:” If Appian decides to commence proceedings, we shall vigorously defend our position and are confident that we will prevail.”
Appian claims that Sibanye’s chief technical officer visited Santa Rita a week after the “geotechnical instability” occurred and concluded in a site report that it was an event “to be anticipated in mature mining operations“.
It plans to use the legal process to find out more about Sibanye’s decision to terminate the deal.
“Through the court process we will be requesting all the board minutes, all communications between every Sibanye employee and site visit reports,” it said.
“All documentation will come out. Texts . . . board communication, CFO communication and that will be analysed thoroughly to determine what the real reason is for them not to complete the transaction.”
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Sibanye, run by mining dealmaker Neal Froneman, has been aggressively expanding into battery metals in an effort to create a third leg for the business alongside gold and platinum group metals.
It announced a string of deals last year and saw off competition from major miners and carmakers in the deal to acquire MVV and Atlantic Nickel, the vehicle that owns Santa Rita, one of the world’s largest open pit nickel sulphide mines.
Nickel is used in the cathodes that go into lithium-ion batteries used to power electric vehicles. Sulphide ores are best suited for the task but are increasingly difficult to find.
When news of the deal broke in October, Sibanye shares fell 5 per cent although they recouped some of the losses the following day when the full terms of the deal were announced.
The company is due to report annual results on Thursday and is likely to face questions from analysts and investors about Atlantic Nickel and its strategy in battery metals.