Sibanye pushes for third platinum deal

February 1, 2016, 4:54am

Sibanye Gold CEO Neal Froneman. Picture: MARTIN RHODES  on BDLive

By Allan Seccombe, Business Day Live

SIBANYE Gold is poised for a third platinum transaction once the regulatory dust has settled around its two audacious deals to make it one of the world’s major platinum producers, CEO Neal Froneman said last week.

Sibanye, which is adding platinum and coal to its portfolio, was looking for growth opportunities in the rest of Africa and would consider base metal mines, he said.

Sibanye, already a leading producer of South African gold, has launched bids to buy Anglo American Platinum’s Rustenburg suite of mines and concentrators for at least R4.5bn, and the whole of Aquarius Platinum for $294m, unlocking synergies between the neighbouring assets and generating cost savings of R1bn in the next three years.

"We’d definitely like to do more in platinum as we’d like to do more in gold," Mr Froneman said. "I don’t think we’d do anything while we still have outstanding regulatory approvals because that would conflict with our submissions. But certainly, post-commission approvals, we’d want to move relatively quickly to make further inroads into the platinum sector.

"We are not going to wait for these acquisitions to be fully integrated into Sibanye and proved successful before we make the first step."

The Aquarius transaction only needs the competition authorities’ approval — which is expected in the next couple of months — unlike the Rustenburg transaction, which needs competition and Department of Mineral Resources approval, and is expected to be in place by the middle of next year at the latest.

"If the platinum markets remain as depressed as they are, it’s actually imperative that we follow through with further platinum sector consolidation, otherwise there are companies that will hit the wall," Mr Froneman said, adding Sibanye had limited debt, strong cash flow from its gold assets and it "can ride out a long storm" in the platinum market.

"We are not constrained by organisational capacity. We have restructured Sibanye to ensure we have good focus on our gold division — we have divisionalised our business — and soon we will announce the CEO for our platinum division."

The announcement was likely to be around the Mining Indaba in Cape Town next week, he said.

Investec analyst Hanre Rossouw has said Sibanye would do well to appoint Jean Nel, the highly respected Aquarius CEO, to head its platinum division, which would include mines in SA and Zimbabwe, and assets that Mr Nel knows intimately.

Sibanye would not produce loss-making ounces of platinum, Mr Froneman said. "Sibanye will demonstrate to the market that we will cut supply. We are not focused on being a producer of a certain number of ounces. Yes, it has social consequences, but it’s the right thing to do and we will do it."

Sibanye is unlikely to look at assets on the eastern limb of the Bushveld Igneous Complex, which would include the region around Steelpoort, Limpopo, where community discontent is impeding mining operations.

The Rustenburg and contiguous Aquarius assets on the western limb of the Bushveld complex would form the base for Sibanye’s growth in platinum, Mr Froneman said.