South African precious metals miner Sibanye-Stillwater聽(JSE:聽SSW) (NYSE: SBSW)聽聽in聽ioneer聽Ltd鈥檚聽(ASX: INR)聽lithium-boron聽project in Nevada聽for $490 million.听
The deal聽is聽one of the largest ever聽in the聽US聽lithium market and comes amid聽rising concerns that, without more investment, demand for the metal could far outstrip supply and delay efforts to combat climate change.听
It聽marks Sibanye鈥檚 third聽battery metal investment this year, following its acquisition of a 30% interest聽in the聽Keliber lithium mine in Finland聽and the聽purchase of a nickel processing plant聽in Normandy from France鈥檚聽Eramet.听
The companies聽said they聽will form a joint venture聽to develop the Rhyolite Ridge lithium mine, roughly聽355 km (220 miles) north of Las Vegas.听
Deal聽is聽one of the largest ever聽in the聽US聽lithium market and comes amid聽rising concerns of an imminent supply shortage
Ioneer will remain the project鈥檚 operator and tap Sibanye鈥檚 experience as the world鈥檚 largest miner of platinum group metals (PGMs) to develop the mine, which also has a large supply of boron, used in soaps and other consumer goods.听
Sibanye-Stillwater has agreed to subscribe for strategic placement of new ordinary shares in聽ioneer聽equal to 7.1% of the Australian miner鈥檚 ordinary share capital post placement, for about $70 million.听
Both miners noted聽will start working on聽secure debt financing to fund the聽remainder of the聽$850 million project.听Full聽financing聽and聽necessary permits聽are聽expected by聽the end of next year, the miners said, and聽the project is expected to begin production by the end of 2024.听
The deal includes聽ioneer鈥檚聽right to expand operations to a nearby lithium deposit, in which case Sibanye will have the option to pay $50 million to secure a 50% stake in that project.听
Boost to US lithium supply
Rhyolite Ridge is an advanced stage, large and long-life lithium project located close to Tesla鈥檚 Gigafactory and relatively nearby ports in California.听
鈥淩hyolite Ridge is a world-class lithium聽project聽and we recognize its strategic value, with the potential to become the largest lithium mine in the US,鈥澛燬ibanye-Stillwater聽chief聽executive Neal聽Froneman聽.听
Once operational, the Nevada mine is set to produce 22,00 tonnes of lithium hydroxide, the type used in most Tesla batteries.听
鈥淭his transaction is the most significant yet for聽Sibanye-Stillwater聽in green/battery metals and in line with the strategy of acquiring assets with proximity to end-user markets,鈥� BMO Capital Markets analyst Raj Ray聽said in a聽note to investors.听
鈥淲ith close to ~95% of Sibanye-Stillwater鈥檚 value concentrated in the PGM business,鈥� Ray wrote, 鈥渢he increasing diversification into the green energy/battery metals space provides a strategic growth area for the company.鈥�
The planned mine is expected to boost local lithium supply to US carmakers and battery producers. In June, ioneer signed an agreement to supply lithium carbonate to a unit of South Korean battery maker聽Ecopro. But the mine has faced opposition from some conservationists because of the聽presence of the rare Tiehm鈥檚 Buckwheat flower聽on its site.听