Precious little hope apart from mergers for platinum miners
Few would bet on a deal in the near future, but you can be sure the bankers are busy crunching the numbers
The forecast for material production declines in the Rustenburg region of the platinum belt in the medium term has revived calls for consolidation in the area. There has been much speculation about a possible tie-up between Royal Bafokeng Platinum (RBPlat) and Impala Platinum’s adjacent Lease Area.
With platinum prices near decade-long lows, few mining firms are expected to have the risk appetite to do significant takeovers in the current market, but a few recent developments are paving the way for an easier tie-up in future.The first is the ruling on the “once-empowered-always-empowered” principle, which means shareholders no longer have to keep stakes in empowerment projects or firms to hold on to their equity points.
The second relates to two recent deals involving Anglo American Platinum – the sale of its 9% stake in RBPlat earlier this year, as well as its announcement last week that it is selling its 33% stake in its joint venture with RBPlat.
One analyst said a tie-up between Impala and RBPlat could realise significant cost savings and increase production. The closure of RBPlat’s head office and its concentrators alone could save R610-million a year, he said, while Impala would save R102-million in annual royalties paid to RBPlat, a number that is expected to double by 2022.
The royalty deal allows Impala to access and mine some of RBPlat’s resources, which makes more sense to access from Impala’s existing mine infrastructure, rather than RBPlat having to sink new shafts. Merging the Lease Area with RBPlat will also allow Impala to extend the life of mine of its Shaft and 20 Shaft.
Few would bet on a deal in the near future, but you can be sure the investment bankers are busy crunching the numbers.