Impala last platinum asset for BHP Billiton
BHP BILLITON MAY soon have no choice but to make an offer of at least R200bn for Impala Platinum. BHP Billiton, the world’s largest producer of metals and minerals as well as energy, also has the world’s best and most diversified portfolio of assets in the resources sector – with the exception of platinum, to which it has no exposure. Nor does it own any reserves.
Impala Platinum, the world’s secondlargest platinum producer, has no controlling shareholder. If Xstrata succeeds in acquiring control of Lonmin – which seems very likely – Impala will be the only available remaining platinum asset worldwide.
The BHP Billiton of old, partly under the leadership of Brian Gilbertson, had no affinity for hard rock, deep-level mining. That’s why General Mining, the forerunner of the Billiton portion of BHP Billiton, consolidated its platinum interests in Impala and sold its gold mines (Buffelsfontein was its flagship). New CEO Marius Klopper, also a South African, is aware of that shortcoming – the absence of exposure to platinum – in BHP Billiton’s make-up.
Billiton is in the process of trying to take over Rio Tinto, the world’s secondlargest mining group. Rio Tinto also has very limited exposure to platinum.
A price of R200bn for Impala would be a premium of around 42% above last week’s market value. That’s too little for such a valuable asset, especially after last week’s excellent operating and financial results for the year to 30 June 2008. Hopefully, SA shareholders will soon place a value of R250bn on this valuable asset. That means a price of about R400/share, as against the current R235. Incidentally, R400/share would only be around 10% more than Impala’s record share price of a few weeks ago.