Good morning and good afternoon to the participants on this call. I'd like to thank you all for joining us for this joint presentation between SFA Oxford and Sibanye-Stillwater. We will essentially be covering an overview of the battery metals market and sector, and then also looking at our green metal strategy and green metals, battery metal assets and green metal assets. I'd just like to point you towards this disclaimer or forward-looking statements. Please be aware that we will be making forward-looking statements, and this just obviously absolves us of any issues that are related to that. I'm James Wellsted. I'm the head of Investor Relations and Corporate Affairs at Sibanye-Stillwater, for those of you who don't know. I'll just be doing initial introductions, and then I'll be closing out the presentation at the end.
I will first hand over to Henk de Hoop, the CEO of SFA (Oxford), who will give an introduction and overview of the business and what they do. Henk will then pass it on to Lakshya Gupta, who is the analyst and producer of the quarterly Battery Metals report, and other reports. These are just a couple of the high quality reports that SFA produces. If there is any interest in following up on any of the reports or getting any other interaction with SFA, I would urge you to contact either Henk, Lakshya or myself after the presentation, and we will be able to set that up. Lakshya will be covering an overview of the battery metal sector, the trends, and then obviously looking at the key metals, being lithium.
I will follow up with an overview of our portfolio of green metals and our green metal strategy, following which we'll move into Q&A, which I hope will be very interactive and should be the main focus of this event today. First of all, I'd like to introduce Henk de Hoop, the CEO of SFA (Oxford). Henk took over from the founder and CEO, Stephen Forrest, earlier this year. Henk comes with a very illustrious background and history as an investment analyst, a research analyst in PGMs and other mining in South Africa, and also a very strong investment back-banking background. So he's well-placed to take SFA (Oxford) forward in the next chapter of its life. Henk, I'd like to hand over to you at this point. Thank you.
Thank you, James. My name is Henk de Hoop. I'm the CEO of SFA (Oxford). SFA (Oxford) has been around for 20 years. We have, over that period, primarily focused on PGMs, and quite a few years back it became evident that we needed to get on top of battery materials and the developments there as it started to impose a future threat to these PGM markets. We have built a battery markets team on the back of that and have since then done a lot of deep research on the developments of EVs and the raw materials required for this revolution to actually materialize. We've also developed capabilities on the hydrogen economy, particularly so important for the long-term future of the PGM markets as well.
In order to do this, we have been in contact with a lot of clients, that is both on the production side of the PGMs and the battery materials side, and also on the consumption side, be it on the industrial side, the automotive side. Our business is part bespoke reports, part consulting, and part quarterly reports. As part of the battery materials team, I'm introducing to you now Lakshya Gupta. He is the Senior Battery Technologies Analyst for us. We're very glad for him to run us through some detailed outlook of the EV developments that we're seeing coming. At the end of this presentation, you're welcome to ask him a lot of detailed questions. Hereby I hand over to Lakshya.
Thanks, Henk. Thanks, James, for the opportunity to present here today. As James highlighted the program, I'll just reiterate quickly. My plan is to present a very brief introduction to batteries and electric vehicle batteries in particular, how the industry has developed in the last decade or so, before moving on to our projections for EV production and what that means for key metals. In particular today, I want to focus on lithium as our analysis and research in the last few years has shown that lithium is likely to be the bottleneck in meeting these aggressive EV projections. Ultimately, I would like to conclude on so what we see as the risk to EV projections. Very quickly, this is just the upfront disclaimer from for legal reasons.
I'm just moving on. Just a quick recap on how lithium-ion batteries have become the industry standard. On the left, you can see this chart of the performance envelope for commercially available rechargeable batteries. I'm only considering the ones that are on the market historically or today, and have seen mass adoption in multiple or at least one, if not multiple applications. As the chart illustrates, lithium-ion batteries have the highest power density, which for an electric vehicle translates to acceleration, and they have the highest energy density, which again for an electric vehicle translates to the range of the car. All batteries have four core components, and the material composition of those components determines the performance of the battery.
These are the two electrodes, the positive and negative terminals of the battery, and these are separated by an aptly named separator, which is coated in an electrolyte that acts as the catalyst. During normal operations, you basically have the ions move between the electrodes through the separator. The energy density is determined by how many atoms or ions are able to be held in your two electrodes or two terminals. The power density is basically the rate of transfer of these ions between the two terminals. The history and development of lithium-ion batteries has been such that initially they were commercialized because of the high potential of lithium. Lithium as the lightest metal offers the highest energy density potential and the highest electrochemical potential. There are
Since its initial commercialization in the early nineties, there have been multiple cathodes that have been developed on to suit different types of applications. Typically, if consumer electronics use a lithium cobalt oxide cathode, power tools like electric drills, they will use a lithium manganese oxide cathode, and electric vehicles use a nickel manganese cobalt and nickel cobalt aluminum or a lithium iron phosphate cathode. Lithium ion batteries have basically become the minimum for electric vehicles so that they have the acceptable performance for both acceleration and driving range that consumers expect, in this stage, due to the prevalence of the combustion engine car.
If we now look at EV battery chemistries in particular, and the different types of cathodes, which have been commercialized in EV batteries in the last decade, it's very quick to see that the cathode materials are the main driving factor behind the price. For EVs to reach price parity to the combustion engine car, it's a quick win to reduce the cost of the cathode. In the West, where nickel-based NMC cathodes have been the preference from manufacturers and also from consumers, the trend has been to push the cobalt content down in favor of nickel, both as a cost reduction method and improving the energy density, and therefore the range of electric cars, and make them more appealing to consumers.
LFP was commercialized in China because of the lower bill of materials and the safety of the chemistry. It is less prone to thermal runaway, so therefore it basically means that the cell won't catch fire by itself because there have been some reactions that have self-propagated within the battery pack. The main drawback with LFP versus nickel chemistries was the lower energy density. But this has largely been solved by cell-to-pack solutions that were developed in 2019 and 2020 by CATL and BYD simultaneously. Independently and simultaneously, I should note, which basically allowed them to take advantage of the greater safety features to pack more cells in the same volume relative to a nickel-based lithium-ion battery cell.
It's important to note that there weren't actually any breakthroughs at the cell level, so there were no energy density improvements in cell chemistry. It was just they put more cells in the same volume, so they basically improved the energy density that way. Next generation LFP batteries are being developed and manufacturers are basically looking to add manganese to the cathode, either by introducing it as a lithium manganese iron phosphate cathode or as manganese as a dopant on the LFP cathode itself. And this will allow energy density to improve at the cell level. Hopefully now everyone's up to speed on, you know, the last kind of 10 years of why lithium ion, why lithium ion in EVs, and the different kind of cathodes that are available on the market today.
We can move on to the powertrain and EV battery trends that we see in the market today and look at how EV forecasts have changed in recent years. It's become a recurring theme. As Henk mentioned, we do a quarterly battery report. Please get in touch if that's of interest to you. I promised that I would plug the report, so that's that box ticked. Basically, as a consequence of doing this quarterly report, what we noticed was every quarter we see EV production forecasts upgraded, and this has been going on since we started the report in 2019. I just want to focus here within the last two years alone, we've seen the forecast jump more by 120%, more than double, within two years.
This has been the case, you know, throughout a global supply chain crisis in the automotive sector through a shortage of semiconductor chips. COVID-19 totally gutting the automotive sector and car vehicle sales. So to put numbers to it, in COVID-19, the total light-duty vehicle impact was around 15-20 million units throughout 2020 and 2021. The semiconductor chip shortages had an impact of about 10 million units in 2021 and 8 million units in 2022. Throughout all of that, EV production forecasts have continued to increase. In the most recent quarter, these upgrades were driven by North America, but as shown on the right, but make no mistake that historically, the main drivers have been China and Europe.
Now, the outlook for North America has improved recently, especially with the passing of the Inflation Reduction Act, which we view as a long-term positive for EV uptake, but there will be some near-term disruptions as the supply chain has to adjust to the new criteria for the rebates, and it's unclear how competitive EVs will be priced in the absence of accessibility to rebates. This is without considering, you know, the outcome of the midterms and the challenges in introducing amendments or implementing the Inflation Reduction Act, which I don't really want to get into. In the near term, there could be slight disruption, but the trend for the medium and long term is likely to be a net positive for EVs. I mean, what's driving these upgrades then?
I mean, why are EVs production forecasts being upgraded? Well, it's a combination really of strong consumer demand, OEMs prioritizing EVs over combustion engine cars through a chip shortage. But I want to focus here on the strong consumer demand. You can see here, there have been a multitude of reports on, you know, China's weakening economy throughout the first half of the year due to the zero tolerance on COVID policies and the resulting lockdowns. Throughout all of that, China's EV sales in the first half of the year, and I'm talking purely battery electric vehicles, so excluding plug-in hybrids. They have doubled in the first half of the year relative to last year. It's not, you know, China had a weak first half last year.
It was largely they had very few lockdowns in the first half of last year. They were out of COVID. It was a booming economy, relatively speaking. It's not a year-on-year change from a low base. They had a good year last year, and it's kind of done the same again this year. Globally, the top 15 EV markets, we're looking at about 80% growth in the first half of the year compared to a 10% decline in overall car sales. On an absolute basis, if we look at it, China's about just under two-thirds of the market and just over 60% of sales. You kind of have China. Collectively, Europe is the second-largest market, but this chart shows the countries. The USA is disproportionate.
Looks like the second-largest market, but the U.S. does have the bronze medal in that, with Europe coming in second. Now, you might look at this chart and say why Italy has been the outlier. There was the expectation for a new round of incentives in the first four months of the year. These were kind of confirmed and passed around May, so relatively little time in the first half of the year to kind of reflect that. We do expect Italy to stop bucking the trend, as it were, you know, going into the second half of the year and going into 2023. This has been through, you know, the global cost of living crisis, a war in mainland Europe, the ongoing weakening global macroeconomic conditions and the logistical headwinds in the supply chain.
As I already mentioned, you know, the extended lockdowns in China, which with China representing 60% of the EV market, is a significant issue. The other factors are the OEMs aggressively pushing EV production targets. Volkswagen in Europe, General Motors in North America, even the Chinese producers are starting to branch out of China, with BYD starting to introduce their models in European markets. We had previously, you know, Chinese models that were determined as or deemed as unsafe for Western markets are getting top scores in European NCAP safety ratings. So basically, the EV market is just becoming more competitive. OEMs are allocating more and more capital resources in making this trend happen and expanding and bringing forward their timelines. It's not just existing automakers.
Tesla is facing competition in China from Model 3 competitors being introduced to the market from NIO, and even in North America, you have the likes of Lucid competing with existing and established automakers, market leaders. Now, there's a risk around, you know, the scaling up of these new entrants and how they managed to pull it off. The fact is that consumers have more attractive models and more and more models to choose from every year, and that is generating demand pull.
The other kind of driving factor behind this is the carrot and stick approach, almost from governments, where on one hand, you are getting subsidies, be it, you know, direct subsidies or tax rebates in the case of the U.S., which are making EVs able to compete on price with the combustion engine cars, prior to the manufacturers, you know, getting to a point where EVs are competitively priced with combustion engine cars. We view that point of price parity as, you know, around the mid-2020s onwards, 2026, 2027 in a business as usual case. The other side of it is the stick approach, where governments are, you know, moving ahead with or announcing bans of new combustion engine car sales. The most recent example being California.
We kind of expect the 12 Section 177 states, or at least if not all, at least some, to follow that ban on combustion engine car sales from 2035. Yeah. You have these multiple factors driving this EV sales, and that's basically increasing production forecasts very aggressively quarter on quarter. Just again, the commodity price impact everyone is aware of, at least aware of, you know, lithium prices reaching all-time highs. Not just all-time highs, but order of magnitude increases in lithium price, compared to its long-term price history. Similarly, there's a war premium on nickel being introduced in the first quarter of the year. Cobalt also is performing or trading at similar levels to its all-time highs.
Despite all of that and in spite of all of that, we still have EV sales growing and almost by 80% accumulatively in the first half of the year. I've just jotted down four factors that kind of, you know, in conversations I've heard justifying this. These are not exhaustive. I'm not arguing that they are affirm, but you know, strong consumer demand, strong demand pull. OEMs aren't passing on the rising cost of production. There was pent-up savings as a result of COVID, so there's more people have more money to spare. OEMs prioritize EVs during chip shortages. Now, it's probably a combination of all of these that just explains this behavior. It's probably too early to conclude that EV sales are inelastic to raw material prices.
I do believe that it is a phenomenon to track, and it isn't an anomaly or something that has happened by accident. My main issue with the latter two bullets there is if there were pent-up savings in a cost of living crisis, if there were pent-up savings coming out of COVID, then EVs should not have outperformed combustion engine cars in last year. Moving into this year, I think consumers are all feeling the crunch on cost of living, so EVs continuing to outperform the combustion engine cars this year. You would expect a similar trend for both EVs and ICE cars. It doesn't explain the discrepancy between EVs and total automotive or light-duty vehicle sales.
As for OEMs prioritizing EVs during the semiconductor chip shortages, well, EVs still have wait times of 6-8 months for delivery, so clearly it's not OEMs are making the cars to build up inventory. They're selling them and they're delivering them, and they're still behind. There is clearly strong consumer demand for these cars. That's the story behind the demand trends. Now moving on to the metals themselves. I'm going to, in the interest of time, I'm only going to focus on lithium as it's the common element in electric vehicle batteries. Well, I say common, but it, you know, I'm excluding the non-lithium chemistry such as sodium-ion. And more importantly, as I said previously, we internally view it as the metal that will bottleneck EV production targets.
Quick summary of the market. We see kind of a tight balanced market this year moving into deficits from next year onwards, but these deficits in 2023 and 2024 can be filled by supply, by a supply response from probable and what we deem as low-risk possible projects. Now, these projects are incentivized at, certainly incentivized at current prices, but even at a price of 26,000, as we have this floor of $ 26,000 on the screen in 2024. They will still be incentivized at that price. That is why we see these quick win projects as being able to balance the market, and a supply response from these projects to fill this supply gap that we see emerging in the next two years.
Now thereafter, we do require higher risk projects to be incentivized, and these will have to be incentivized in order to bring forward their production timelines or accelerate their project development phases. We do expect an uptick in price from 2024 onwards. I'll speak about those projects in a little while. If the price floor of 26,000 seems low in 2024, then I would just like to justify it with our cost curve here shown on the screen. And you can see here that even fourth quartile producers have production costs of around $6,000-$8,000 per ton. And even if you double that within the next two years because of inflation going out of control, you would still be making a healthy margin at $26,000 per ton.
That's kind of our justification internally for $26,000 per ton by 2024. The other kind of interesting dynamic to note here is producers are updating their contract prices to be more dynamic and reflective of the market spot prices so that they're better able to capture the upside. What we saw in the first half of the year were producers or the major producers at least had offtake agreements and contracts in place which secured their sale of volumes, but they were not able to capture the price upside as much of the price upside as lithium prices shot past $70,000 per ton in the first half of the year. In terms of the supply and demand, what the supply versus demand looks like. We have...
Oh, on the left here in the slide, we have our base case supply profile, which is based on mines that are already in production or recently commissioned projects that are now ramping up to reach steady state production. You can see by 2026 that this figure starts to dip as mine depletion kicks in at older existing mines. You can see that our probable and low-risk projects fill the deficit out to 2024. With our medium risk projects, you can get to a 300,000 ton surplus in 2026. It isn't an issue of resource availability. It is an issue of getting these projects to come online in time.
It will require producer discipline because if all of these projects came online on time, then you risk a surplus market and a similar kind of boom-bust price cycle as what we saw in 2018, 2019. On the demand side, we kind of have a 25% per annum growth growing by almost or just under 1 million tons by 2026. Over that period, BEVs represent about three-quarters of demand growth. China alone represents about a third of that, and Europe is the second largest contributor. We've left off the regional demand from non-automotive applications because the cycle a bit too crowded. You can see the bulk of the growth is coming from battery electric vehicles due to the intensity of use per unit.
Basically, meeting the upgraded EV production forecast requires the timely commissioning of higher risk projects. You can't do it without de-risking probable and low risk possible projects earlier. Otherwise you're gonna have a supply gap emerging, if you don't have, you know, alternative sources of lithium. What are these alternative sources of lithium? Well, one is the high spotlight that has been placed on the battery recycling sector, as a growing area of interest. The main motivator is twofold. One is to localize the production of lithium and shorten the supply chains, reduce the reliance on Chinese refineries, and just overall the environmental benefits of recycling versus extracting primary material out of the ground.
SFA has just completed a major lithium battery recycling study where we've mapped the entire sector and we've modeled what the volumes of the material coming from end-of-life EVs could be, and also from Gigafactory scrap all the way out to 2040. Our key takeaways were that recycling contributions are going to be quite minimal for much of this decade. On this chart, I've shown the value of the metal contained in scrap EVs, and I've limited to the three critical cathode metals at 2021 average commodity prices. The reason I've used 2021 prices is because I just wanted to remove the distortions of today's spot prices and 2022's prices because they're not justified by the market fundamentals, basically. Or at least the supply demand balance. They're not reflective of those.
The key takeaways we had from the recycling study that we've just completed is that as you can see on the bottom left chart, and I've used Europe as a case study, but this is reflective of all regions. The bulk of material will come in the form of production scrap from manufacturing. EVs are really only starting to contribute major volumes from around 2027, 2028 onwards. Now, there are some regional considerations and differences there. In North America, EVs become a major source of lithium-ion battery scrap faster than Europe. This is because of a weaker Gigafactory pipeline in North America, but also because of larger average battery pack sizes in North American EVs. This could change going forward, as EV battery pack sizes increase in Europe, but that's based on today's projections.
The Chinese recycling sector, we don't see growing as aggressively as Europe and North America, because the economics of recycling LFP batteries are a lot weaker. That's just a function of them not containing nickel and cobalt, so the value of the batteries themselves is a lot lower. Obviously, this changes if lithium prices are above $65,000 per ton, but we don't view that as a long-term sustainable price. The other key findings were that the battery recycling sector is very crowded, and capacity is being built very aggressively. It's not in line with how quickly the feed will become available. You can see on the map on the right, just for Europe, how crowded the sector is, especially concentrated around Germany, Hungary, and Poland, which is where Gigafactories are located, or planned Gigafactories are.
We expect a scramble in consolidation over the next kind of 5-6 years as it becomes some recyclers will struggle for feed. Combined with the dynamics around where the feed is coming from in the coming decade, it basically means that proximity to Gigafactories will be crucial to secure feed and operational and economic operations throughout this decade. This is fresh off the press, and please get in touch either through me, Henk or David Mobbs, who is our Head of Marketing, if this study is of interest. We'll see how we can help. If we now look a bit further out and summarize the above thesis that I've just spoken about, and again, I've picked 2030 because it's a nice round number.
Basically, project execution risks surrounding lithium deposits could jeopardize around 15 million BEVs by 2030. Aggressive EV demand projection upgrades have upgraded lithium demand by 2030 to over 2 million tons, and existing mines will only cover a fraction of that requirement. Higher risk projects will be required from 2025 onwards to fill the supply gap. We define higher risk projects, sorry, as medium risk and high risk possible projects that. The disclaimer here is obviously that this is a dynamic list, and we update it as the various projects move through their development cycles. Basically, the factors we consider here are the deposit type and the history of commercialization for that deposit type. Has that particular deposit been commercially mined before?
Especially for lithium, the geographical jurisdiction of the project, the political stability of the region, the permitting timelines and how mining-friendly policies they are, in that jurisdiction and access to skilled labor are also some factors. The development status of the project itself. Is it an exploration stage, PFS, DFS, et cetera? And then how easy is their perceived access to funding? Do they have a major shareholder like a Glencore or Trafigura or are they a junior? That, that's some of the factors that can get in touch if that's of interest or we can. I'm happy to have a more robust discussion around that. Basically the bottom line is that half of the projected EVs by 2030 are at risk from the timely execution of higher risk projects.
I'm sure some of you are wondering what happens if you flip the demand chart, so you have BEVs at the bottom, what that 15 million turns to. If we flip this and we say that the demand destruction will happen on the other lithium demand segments or from hybrids, then you still have 2 million EVs at risk or that will require basically the high risk or at least a medium-risk possible projects. Now it's up for debate, and I say this even internally we have this discussion as to whether that means that basically another 15 million combustion engine cars are going to be produced in 2030 because there wasn't enough lithium to produce 15 million electric cars. The alternative is that basically the total light vehicle production is reduced by 15 million units.
The current market trend suggests that I'm in favor of the second one. It's an ongoing discussion, and both sides have valid arguments, to be honest. Moving on. In conclusion. The EV trends, I mean, despite significant macro and logistical headwinds, BEVs have continued to surprise to the upside. There are important regional variations in fleet penetration, so it's not a one-size-fits-all picture across the globe. It is a consistent theme that the largest and emerging car makers keep announcing and accelerating their EV production timelines and committing larger and larger sums to the transition of converting existing ICE capacity or building new EV production capacity. This is in turn leading to consumers having more choice in BEV models that are being introduced to the market in all the different various segments.
A couple of years ago, most of them were in SUVs. We're now starting to see in the form of the ID.3 and various Chinese models. We are starting to get electric hatchbacks. Electric sedans are being now introduced. Basically, consumers have more choice. Governments are also pushing consumers towards electrification through both a carrot and stick approach, be it through subsidies to make them cost competitive or, you know, just making them unattractive to consumers by saying that you're not going to be allowed to drive them. However, on the supply and the raw material availability side, there is an incoming deficit for lithium that could slow growth rates, especially EV production growth rates from around mid decade, so 2025 onwards. We perceive a significant execution risk in especially new deposit types that are being explored and commercialized.
The bottom line is that there's a total potential impact of around 15 million EVs that would not or that might not be produced by 2030. Now, this could maybe provide a longer tail for combustion engine cars that are not zero emission, but considerably cleaner, if you have plug-in hybrids and even full hybrids. That could translate to a longer tail for PGM demand in the second half of the decade. Thanks for your time. I'm now going to hand back to James and I look forward to your questions.
Thanks, Lakshya. As I mentioned earlier, I will be giving a brief overview of Sibanye-Stillwater's green metal strategy and the unique global portfolio of metals that we've built up and continue to build up. For those of you who don't know Sibanye-Stillwater, we're a South African-based but listed on the JSE in South Africa and the New York Stock Exchange. A market cap of about ZAR 153 billion or $10 billion. With quite a significant portfolio of diverse commodities across the five continents, which we've built up over the last 9 or 10 years since we listed in 2013. As you can see, primarily the production base and the primary production input comes from South Africa at the moment.
We've got gold assets in Gauteng and in the Free State. We've got quite substantial PGM assets in the Bushveld Igneous Complex in the North West Province and in Zimbabwe. We've also got in the United States of America PGM exposure through our U.S. PGM operations, which used to be the Stillwater Mining Company, as well as now moving into the battery metals with the investment in Keliber in Finland, the Sandouville nickel processing facility in France, and then Rhyolite Ridge lithium project in Nevada in the United States. We also acquired a tailings retreatment business in New Century in Australia.
We've got 19% stake in that business to complement our existing, 50% investment in DRDGOLD, which is a gold tailings reprocessing business in South Africa, primarily. This is obviously complementary to our green metals, recycling and dump reprocessing, obviously going to become a bigger part of, global supply going forward, as Lakshya pointed out. Clearly, these two dump reprocessing assets are complementary to our existing, recycling, PGM recycling business, which is a leading, recycling business in North America, based at our Montana operations in the U.S. We also have a number of other projects, including copper and PGM exposure in Argentina and in Canada that are currently under development with other partners. Diverse portfolio of mining and processing operations and projects and investments across five continents.
I'd just like to give an overview of our journey, how we got to where we are, before moving on to the specific battery metal assets that we've acquired and where we find ourselves positioned. Just to recap, in 2013, if you look at the bottom left-hand corner of that graph, we listed after being unbundled by Gold Fields as a South African gold mining company with gold assets in South Africa. We turned those assets around and established ourselves as a leading dividend-paying company in the industry, generating strong cash flow and with a very low gearing on our balance sheets at the time. That positioned us well to pursue this value accretive growth journey that we've then followed over the last nine to 10 years.
Initially, we were looking for growth opportunities in the gold space, but because of the valuation differentials with a lot of the gold companies trading at significant premiums to our South African gold assets and to the value of our business, it was extremely difficult to find value accretive growth opportunities in gold. We cast our eyes into other areas, where we could apply our skills and realize value, and we identified the PGM sector as an opportunity at the time. The PGM sector coming out of the global financial crisis was in severe distress. Most of the companies were carrying a lot of debt. PGM prices had collapsed and costs were quite high. As a result, you know, financially, these assets were in a lot of distress, and the valuations had pulled back to very attractive levels.
We spent quite a lot of time, as is how we approach our M&A, looking at the sector, trying to make sure we understood the fundamentals of the PGM sector. We initially identified significant upside in palladium, which had been in deficit for some time, but also identified the long-term upside in all of the other PGMs, particularly platinum over the longer term. Hence, we made our first move into the PGM sector, acquiring Aquarius Platinum in Rustenburg in 2016, followed by Stillwater Mining Company in 2017, which was a transformative acquisition for us, really positioning us on the global map and on the global playing field and obviously diversifying our exposure away from South Africa.
We concluded the PGM acquisition strategy in 2019 with the acquisition of Lonmin, which then gave us mine to market effectively exposure through in the South African region, with also in the U.S. having exposure through Stillwater all the way to refined metal through a partnership with Johnson Matthey. We also in the U.S. had acquired with Stillwater a leading PGM recycling business, which we've expanded and invested in to grow that business and are looking to continually grow that business, which again links back to what Lakshya said the importance of secondary supply through the circular economy. It's going to definitely become a bigger factor going forward, and that's where we've seen a lot of opportunity in future for future value.
We are building a gonna be building a leading global recycling and leading tailings retreatment business across the globe. The green metals exposure, which is our more recent focus, we identified that opportunity in 2017 when we were looking at the PGM sector still. I think pointed out that, you know, they were looking at it as trying to understand the threat to PGMs. We didn't see it as a threat to PGMs. We believe that it's complementary to PGMs, both being used in the automotive sector. Obviously, you know, battery metal or battery EVs are going to take up a bigger share of the global auto production and auto sales, but we don't see it as necessarily a threat.
We still see a significant future and significant upside for PGMs over the next 5-10 years and then beyond with the hydrogen economy. We don't think that battery metals is a threat, and the battery penetration is only a threat. We think it's also an opportunity, and hence, we acquired initially in 2019, SFA to do some in-house research for us on the sector, for us to, first of all, understand the evolution of the powertrain, and then battery chemistry and what the key metals were gonna be for the future development of that industry.
Once we had identified the key metals, which you can see listed there on the right, we obviously SFA did quite a lot of fundamental research trying to understand what the supply-demand fundamentals were, the longer-term position was gonna be before we started to make our move. All of that pre-planning and pre-research really positioned us well to secure a series of transactions in 2021.
Initially, beginning with the announcement of the Keliber transaction in Finland, followed by Sandouville, the nickel processing facility which we acquired from Eramet, followed by the Rhyolite Ridge project, which is a high-quality lithium boric acid project in Nevada, and then the acquisition of a 20% or just under 20% stake in New Century, which is at the moment a zinc, but moving into copper tailings retreatment business in Australia. Again, as I said, complementary to our existing 50% stake in DRDGOLD, which is a gold tailings retreatment business. We obviously are looking to grow the battery metals further in order to enhance our green metals exposure.
Clearly, over the last year or so, the prices have run quite hard, as Lakshya pointed out, and the market became very difficult to really find value-accretive opportunities. We've tended to stand back on the sidelines. We do think that there will be further opportunities, given the current economic outlook, with a recession in place, high inflation. We do think that there is gonna be an impact on the metal prices and that valuations will come back, and we are well-positioned to take advantage of that and continue to grow our portfolio in a value-accretive manner. I'm just gonna give an overview of some of our acquisitions that we've made to date in the battery metal space.
The key obviously being, Keliber lithium project, which was the first acquisition that we made, initially investing EUR 30 million for a 30% stake. That's EUR 30 million. Keliber is an advanced lithium hydroxide project in Finland, which is aiming to be the first fully integrated European lithium producer with direct access to the European BEV markets. That's a critical point because that is really what our strategy has been focused on. It's been about supplying critical metals into those regions that are have got burgeoning battery industries, being Europe and North America.
What we identified some time ago was that the risk to global supply chains and global trade has been exposed by COVID and since by the conflict in Ukraine, that there was gonna be increasing regionalization of supply chains going forward. This is indeed coming to pass. We can already see it in some of the legislation being passed, like the IRA that Lakshya mentioned earlier in the U.S., which is promoting the use of local, locally supplied metal or from trade partners. We think that going forward, this is gonna give us a critical advantage. Keliber is obviously located close to the European region. It's got in a very supportive jurisdiction with the Finnish government being quite supportive of developing a battery metal hub that will supply into Europe.
It's also got the benefit of being mostly hydroelectricity, so green energy that is driving our plants and the mine. Obviously, the distance from Finland to those key battery industries in Germany, Poland, et cetera, that Lakshya pointed out, gives us also an advantage over the other producing areas like Australia, Chile, Argentina, where that metal has got to be transported over long distances. It's going to attract a higher carbon footprint. Obviously with shipping rates where they are at the moment, you know, it's gonna attract higher costs.
We think this is gonna be a critical advantage for the group, and that is how we've positioned ourselves in terms of our acquisitions, with both Keliber and Sandouville located close to Europe and able to deliver into the European markets, and then obviously Rhyolite Ridge being located in Nevada, in the U.S., and as you know, close to the Tesla Gigafactory and close to all of those Gigafactories which are being developed on the lower eastern seaboard. We have recently taken a decision to increase our stake in Keliber to over 50%. We had an option to do that. That's been exercised, and we simultaneously made an offer to minorities to buy out minorities other than the Finnish Minerals Group.
The Finnish Minerals Group is the entity through which the Finnish state owns its interests in mining and exploration properties in Finland. We would like them to stay on. They will be staying on as a strategic partner. We would like to develop that relationship with the Finnish Minerals Group further going forward. What we're looking at is potentially 80%-85% holding ultimately in a very high quality project. This has been proven by an increase of over 31% in reserves since we first acquired the first stake in Q1 2021, and a definitive feasibility study which has been completed. Again underpins the value upside in this project. We also think that there is potential for expansion in future.
There are satellite deposits which could be considered, and we could produce more than just the 15,000 tons of lithium hydroxide, which was initially envisaged into the European market. We think this is gonna be a very successful project. Permitting is moving forward well. We're looking at reaching full production by about 2026 onwards. Looking briefly at the other two assets that we've acquired. Sandouville, which is a nickel processing facility in France. We acquired 100% in February this year for EUR 85 million. and what we'll be doing we're busy with that integration and building up production up to capacity of around 16,000 tons of nickel products by in the next 2-3 years.
We are also looking in the key upside for us with this asset. It's located in Le Havre, the Port of Le Havre in the northern part of France. Got good access to sea, rail, and obviously road networks going into Europe. What we're doing is we currently got scoping studies for nickel sulfate, battery metal grade nickel sulfate, a PGM autocatalyst recycling, and a battery metal recycling facilities which are currently being undertaken. That is where there's potential, potentially significant value upside for the group is again developing the recycling and the battery metal facilities to supply into the European market. Rhyolite Ridge, again, a very high quality boron lithium project. The key part about this asset is obviously the size of the asset. It's quite well advanced.
It will also be producing boric acid as a byproduct, which reduces the costs of lithium project production quite significantly. We currently have a 7.1% stake in Ioneer, which is the company that's been developing that project, which we acquired last year for $70 million. On granting of all of the permits and meeting of the conditions precedent, we have an option to acquire a 50% stake in the project itself. Currently, the estimated capital is around $490 million-$500 million, so that 50% interest will be determined, you know, when all of that permitting is secured. Importantly, Rhyolite Ridge and Ioneer, they've secured offtakes with Ford, and some of the other auto producers, which obviously lowers the risk of that project.
They're all linked to more market-related prices. We're not locking in long-term prices that are at lower rates, and we're still giving ourselves exposure to what we see as being quite significant lithium prices going forward. Just in summary, we strategically well-placed for future scenarios. As Lakshya pointed out, the fundamental outlook for battery metals is very positive, both from a demand pull and supply side with significant challenges to permitting. You know, I think those projects that Lakshya highlighted at the end of his presentation, our view is it's gonna be a lot harder to develop a lot of those projects.
From our experience in the mining industry and having looked at some of the permitting challenges experienced recently, we don't think that supply is gonna come on at the rate that demand requires. There is gonna be a deficit in lithium particularly and in other battery metals, which is gonna support high prices for some time going forward. We also think that because of these supply challenges and the fact that there are gonna be these deficits, that there will be an extended ICE cycle, as in support for our PGM business is going to continue for longer than people expect. We think that those battery penetration rates are not gonna be achievable. As a result, we are also gonna see quite good support for PGM for longer than the market anticipates.
Obviously going forward, the developing hydrogen economy provides quite a lot of excitement and upside for metals like platinum, iridium and ruthenium. Our green metals portfolio, we think, is strategically well-positioned for supply of the critical metals into those chosen regional supply chains that are highlighted. We are establishing key partnerships, for instance, in France, with Verkor, in order to secure maybe a relationship to supply metals into Verkor, which is a Gigafactory. It's gonna be the first Gigafactory in France. Also to secure scrap from battery production in order to feed our recycling business, which we hope to develop in France going forward as well.
Establishing those key partnerships, thinking of the future and trying to build those partnerships in strategic ecosystems, which will further our impact on being a force for good and creating superior value for all our stakeholders. We think we've got a unique, diversified portfolio which ensures balance and risk mitigation. As you would have seen from our recent results, we're in a very solid financial position. Our balance sheet is in a net cash position. We're generating net cash or positive cash flow at the moment. The outlook after having come through quite a difficult period in the first half of this year is much better than even the first half.
We see significant upside for our assets and our financial position and going into a potential or a global recession, where we think we're gonna see more attractive valuations coming through in some of these battery metal assets. We see a further ability to build on our unique portfolio of green metals and to continue to deliver that value to stakeholders. At that point, I'd like to end the presentation and move on to Q&A. Again, we'd like it to be a very interactive process, so please feel free to ask any questions you may have.
You know, the primary focus obviously is on the battery industry, but happy to also answer questions on Sibanye-Stillwater itself, and I'm sure Lakshya will also be able to answer any questions on the PGM sector that you may have. Thank you.