Subsequent to securing an effective controlling interest of approximately 85% in Keliber Oy (Keliber) as announced on 3 October 2022, the Board of Sibanye-Stillwater has approved capital expenditure of €588m for the Keliber lithium hydroxide project (Keliber project), beginning with the construction of the Kokkola lithium hydroxide refinery (the Kokkola refinery). The Kokkola refinery will be located at the Kokkola industrial park in Finland, a world-class industrial and logistics hub, strategically positioned to supply the growing European battery sector.
The construction of the Kokkola refinery marks the first phase in the development of Keliber’s wholly owned, advanced, Keliber project, located in the Central Ostrobothnia region of Finland, one of the most significant lithium-bearing areas in Europe.
Four initial open cast and three underground, highly mechanised mining operations, (primarily Syväjärvi and Rapasaari, with Emmes, Outovesi, and Länttä towards the end of the project life), situated across three municipalities (Kaustinen, Kokkola and Kronoby), are planned to supply ore to the Päiväneva concentrator which will be situated close to the Rapasaari mine. Concentrate produced at the Päiväneva concentrator is planned to be trucked approximately 66 kilometers to the Kokkola refinery. The Kokkola refinery is forecast to produce an average of 15,000 tonnes of battery grade lithium hydroxide monohydrate per year (as per the DFS below).
A definitive feasibility study (DFS) completed by Keliber in February 2022 and updated in October 2022 confirmed the robust economics of the Keliber project at hydroxide prices significantly lower than the average prevailing spot prices over the last 12 months. Open pit and underground ore reserves* of 12.7 million tonnes (0.92% Li2O) and mineral resources* of 17 million tonnes (1.02% Li2O), support an estimated life-of-mine of 16 years at a forecast average milling rate of approximately 800,000 tonnes per annum. The DFS assumed average life-of-mine operating costs of €6,751/tonne of lithium hydroxide and project capital (adjusted for inflation to October 2022) of approximately €588 million. The DFS forecast a 20% post tax internal rate of return (IRR) and a post-tax net present value (NPV) of €887 million (real 2022 terms) for the Keliber project, assuming an 8% discount rate, an average lithium hydroxide price of US$26,034/tonne and an average exchange rate of €/US$ 1.10. Assuming SFA Oxford’s long term forecast lithium hydroxide price of US$37,000/tonne, 42% higher than assumed for the DFS, the NPV of the Keliber project increases by 94% to €1.72 billion (real 2022 terms) at a 27% post tax IRR.
Note: All cost and capital quoted at October 2022 real terms.
*Open pit and underground mineral resources and ore reserves declared by Keliber Oy as at October 2022 estimated according to the JORC 2012 code. These will be reviewed for SAMREC and SEC compliance as part of Sibanye-Stillwater’s 2022 annual declarations
Keliber is well capitalised following the injection of approximately €146 million through the issue of new Keliber shares to Sibanye-Stillwater in terms of Sibanye-Stillwater exercising its pre-emptive right to increase its stake in Keliber from 30.29% to 50% plus 1 share.
A further capital raise by Keliber is anticipated to close at the end of January 2023, to raise approximately €104 million (as announced on 3 October 2022) which will complete the equity requirements for project capital. Sibanye-Stillwater plans to underwrite the capital raise, with Sibanye-Stillwater’s contribution dependent on the extent to which the Finnish Minerals Group participates in the capital raise. The balance of the project capital is expected to comprise conventional debt, and facilities are currently under discussion with third party lenders to raise a minimum of €250 million of debt to fully fund construction of the project.
Construction of the Päiväneva concentrator and the initial two open pit mines, the Syväjärvi mine followed by the flagship Rapasaari mine will commence once all the environmental permits are received. The Syväjärvi mine is fully permitted, while the environmental permits at the Rapasaari mine and the Päiväneva concentrator are currently outstanding. Should the Kokkola refinery be completed ahead of the permitting of the mines and concentrator, the Kokkola refinery will be able to profitably beneficiate third party spodumene until such time as it can feed its own mines’ supply. Keliber has engaged with third parties to supply spodumene concentrate to the Kokkola refinery should the permitting of the Rapasaari mine and the Päiväneva concentrator be delayed, and extensive work and analysis has been completed to ensure the feasibility of the Kokkola refinery as a standalone operation.
Construction of the Kokkola refinery, which is the longest lead time component of the Keliber project, will ensure optimal scheduling of the other key project components, ensuring the timeous ramp up of the project to deliver into and capitalise on forecast looming lithium deficits and elevated lithium prices.
The approval of the Kokkola refinery follows Sibanye-Stillwater increasing its shareholding in Keliber to a controlling 84.96% and the consolidation of the Keliber shareholder register from 114 to 10 shareholders (Finnish Minerals Group 14%; minorities 1%), enabling Sibanye-Stillwater to act decisively and fast-track the Keliber project.
The commencement of construction of the Kokkola refinery will deliver significant benefits for the Finland fiscus and regional stakeholders, with meaningful local investment and support for regional suppliers. Keliber will employ around 300 people (including contractors) at steady state with around 500 people involved in the construction phase, approximately half of them at the Kokkola refinery
The selected technology solution is provided by global leaders Metso Outotec and FLSmidth. Keliber’s lithium hydroxide production is based on soda leaching technology, which is expected to be more energy efficient with a lower environmental impact than alternative processes. Energy sources will primarily include steam, natural gas and hydro power electricity, which contributes to Keliber’s relatively low CO2 emissions in comparison with current global lithium hydroxide production benchmarks. Circulated process water will account for about 80 per cent of the plant’s total process water consumption. The side stream created in the process, analcime sand, can potentially be used in construction, primarily in the expansion of the Kokkola harbour.
Keliber is emerging as a scalable district opportunity and Sibanye-Stillwater is committing further exploration capital with the aim of extending the resource potential of the area.
Neal Froneman, CEO of Sibanye-Stillwater said “We are delighted to advance and grow our presence in the European battery metals industry through Keliber, which we expect will be the first fully integrated European lithium hydroxide producer supplying the European market and is expected to have one of the lowest carbon emission footprints in the industry. We look forward to working with all stakeholders to deliver this exceptional project which will contribute to the Finnish battery metals ecosystem as well as to the growth of our unique portfolio of green metals that reverse climate change.”