South Africa’s Sibanye ordered to pay damages over failed $1.2-billion Brazil mines deal

Timilehin Adejumobi -
Key Points
  • Sibanye Stillwater faces court ruling to pay damages after canceling a $1.2-billion deal for Brazilian nickel and copper mines. 
  • Investment firm Appian Capital sought compensation, asserting Sibanye had no legitimate grounds for terminating the acquisition agreement. 
  • Sibanye reported a R7.14-billion ($379 million) loss in H1 2024, contrasting sharply with a R7.8-billion ($427 million) profit.

Sibanye Stillwater, a multinational precious metal mining company led by South African executive Neal Froneman, has been ruled liable by the London High Court to compensate investment firm Appian Capital Advisory over the termination of a $1.2-billion deal.

The court's decision comes on the heels of Sibanye’s failed acquisition of Brazilian nickel and copper mines, specifically the Santa Rita and Serrote assets.

Appian revealed that the court found Sibanye obligated to finalize the deal, which entailed acquiring a 100-percent stake in the Santa Rita nickel mine and the Serrote copper mine in Brazil. Sibanye initially expressed its intent to complete the acquisition by the end of 2021, with a definitive purchase agreement announced on Oct. 26, 2021, for $1 billion in cash.

Dispute over termination

The transaction unraveled in January 2022 when Sibanye terminated the agreement, prompting Appian to seek compensation. Judge Christopher Butcher presided over the case and ruled that Sibanye had no legitimate grounds for canceling the acquisition, thereby obligating the company to compensate Appian. A separate hearing to determine the damages is set for November 2025.

Appian, an investment advisor specializing in metals and mining, is pursuing full recovery of its losses, including accrued interest, resulting from the failed deal. In a response, Sibanye acknowledged the trial date but declined to comment on potential compensation amounts.

Sibanye’s financial struggles

This ruling arrives amid significant financial challenges for Sibanye Stillwater. Under Froneman's leadership, the company, a leading producer of platinum, palladium, and gold, reported a R7.14-billion ($379 million) loss in the first half of 2024, a compared to a R7.8-billion ($427 million) profit in the same period of 2023.

Despite these challenges, the Public Investment Corporation (PIC) recently acquired a R8.58-billion ($494 million) stake, equivalent to 15.048 percent in Sibanye Stillwater, indicating confidence in the company’s potential for recovery.

The Santa Rita mine is among the largest nickel-cobalt sulphide open-pit mines globally, producing concentrates suitable for battery precursor processing. Meanwhile, the Serrote mine has an 18-year reserve life and optimization potential as an advanced open-pit copper mine.