Frone­man takes the plat­inum plunge

CityPress - - Business - DEWALD VAN RENS­BURG dewald.vrens­burg@city­

Neal Frone­man has fi­nally turned his well-pub­li­cised de­sire to buy the Rusten­burg mines of An­glo Amer­i­can Plat­inum (Am­plats) into ac­tual ne­go­ti­a­tions.

If the deal goes through, Frone­man – now al­most through his third year at the helm of Sibanye Gold – will be­come ar­guably the most im­por­tant man in South African min­ing.

The plan to turn Sibanye, al­ready the health­i­est and most cash-flush lo­cal gold min­ing com­pany, into a plat­inum and gold group, bucks the over­whelm­ing trend among the ma­jor min­ing com­pa­nies to split up their hold­ings into smaller com­pa­nies.

There haven’t been any ma­jor South African gold and plat­inum in­ter­ests housed un­der one cor­po­rate um­brella since An­glo Amer­i­can di­vested of its last shares in An­gloGold Ashanti al­most a decade ago.

The Am­plats ac­qui­si­tion would make Sibanye the coun­try’s ma­jor pre­cious met­als com­pany and prob­a­bly the largest sin­gle em­ployer in lo­cal min­ing – af­ter the com­bin­ing of Sibanye’s 36 000-odd work­force with Rusten­burg’s more than 16 000 em­ploy­ees.

Frone­man has distin­guished him­self from other min­ing bosses in South Africa by adopt­ing a less diplo­matic ap­proach to labour is­sues. He also has a con­trar­ian ded­i­ca­tion to tra­di­tional labour-in­ten­sive South African deep-level, hard-rock min­ing – labour be­ing the one thing ev­ery­one else is hellbent on re­duc­ing.

De­spite the fact that Frone­man had ex­pressly an­nounced more than a year ago that he wanted Rusten­burg, so many peo­ple were sur­prised by Thurs­day’s an­nounce­ment that Am­plats’ share price shot up 9.3%. Sibanye’s shares also rose, but by 3.5%.

No prices have been men­tioned in public. But Frone­man made a point last year of pub­licly declar­ing Am­plats’ val­u­a­tion of Rusten­burg – at $1.4 bil­lion (R19.2 bil­lion) – as far too high.

Things have got worse since that fig­ure was quoted more than a year ago, so Am­plats is most likely talk­ing about a more mod­est fig­ure now.

Sibanye re­cently shored up its kitty with a new $350 mil­lion credit fa­cil­ity, on top of the R1.3 bil­lion credit it al­ready had in hand. Money should not be a prob­lem, but Rusten­burg is hardly the only thing Sibanye wants to get its hands on.

De­spite ear­lier say­ing he did not want to buy plat­inum mines un­less he had a good plat­inum smelter, Frone­man’s talks with Am­plats do not in­clude a smelter. He will have to find one.

In a fi­nan­cial re­port last month, Sibanye an­nounced it was build­ing its own so­lar power plant – and might want to set up its own coal power plant with a ded­i­cated coal mine – to re­duce its de­pen­dence on Eskom.

The dif­fer­ences be­tween the Rusten­burg plat­inum mines and Sibanye’s Car­letonville gold mines are stark.

In its latest re­sults to the end of June, Sibanye re­ported op­er­at­ing mar­gins of 33% at its three ma­jor mines, Drie­fontein, Kloof and Beatrix. Am­plats re­ported an op­er­at­ing mar­gin of 7.5% in Rusten­burg.


EM­PIRE BUILDER Neal Frone­man, chief ex­ec­u­tive of Sibanye Gold

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