Sibanye in the dark over regulations
• CEO says the group has reviewed projects as the Mining Charter could raise costs of doing business in SA
Regulatory uncertainty, particularly about the third iteration of the Mining Charter, was one of the reasons for Sibanye Gold’s review of a number of large growth projects, Sibanye Gold CEO Neal Froneman said.
Speaking on the sidelines of the Mining Indaba in Cape Town on Monday, Froneman said the charter had cost implications for Sibanye’s West Rand Tailings Retreatment project, its Burnstone gold mine and its UG2 processing plans.
Sibanye said last week it had put these projects under review and they could be put into care and maintenance or delayed. It blamed rand strength, which was eroding profit margins.
On Monday, Froneman said the delays in finalising the third iteration of the Mining Charter, which has been criticised by the industry for the extra cost and complexity it puts on mining companies in a difficult and volatile commodity market, and the long wait for the conclusion of the amendments to the Mineral Resources and Petroleum Development Act, were causing uncertainty in the sector.
“We have a new charter being gazetted and, quite honestly, we don’t know what the cost of doing business is yet,” he said. “It’s prudent for us as a company to stand back a bit and say that once we have certainty we’ll look at further commitment to these projects.
“Charter three could see a big increase in cost of doing business in SA, from allocating money to funds and an increase in procurement [costs]. There are many elements that create uncertainty, including the ownership issue,” Froneman said.
One issue was whether past empowerment deals to create 26% black ownership that had subsequently terminated counted towards a transformation score card, or whether miners had to be perpetually empowered, as the Department of Mineral Resources demanded.
The decision to suspend the growth projects was made as Sibanye was about to incur a large debt with the $2.2bn purchase of the US-based platinum metals miner, Stillwater Mining. Sibanye will issue up to $1.3bn in equity and debt to fund the $2.7bn it needs for the deal.
Shareholders had told management they wanted a lot less debt and an increase in equity from the $750m-$1bn range it had when the company announced the Stillwater deal last December, Froneman said.
A reliable source said Sibanye had come close to a takeover deal with Lonmin, the world’s third-largest platinum miner.
The real targets in Lonmin would be the processing plants, including its smelters and refineries, which would give Sibanye its sought-after mineto-market platinum strategy, which it will get with the Stillwater mines, plants and recycling operations.