Amplats sells its major mines

Labour-intensive operations discarded months after longest strike

ANGLO American Platinum (Amplats) has sold its labour-intensive South African mines to bullion producer Sibanye Gold for R4.5-billion to focus on newer and mechanised sites.

Amplats has been weighing either a sale or a flotation of the affected Rustenburg mines, which comprise the world’s top platinum producers with an annual output of more than 800 000 ounces, after a record five-month strike last year.

Initial market reaction was positive. Shares in Amplats, a unit of Anglo American, jumped 5% to R330.

Sibanye’s stock rose 3.7% to R182.

“With so much uncertainty over PGM [platinum group metal] prices in the near and medium term, the structure of the deal delivering greater value longer term seems the only and most sensible course of action,” Investec Securities said in a note.

Amplats chief executive Chris Griffith said: “We are focusing on our core assets and exiting those assets we have identified as non-core.”

Anglo American – the fourth-largest mining group listed in London – has been aggressively marketing assets, including its loss-making South African platinum mines, as part of a $4-billion (R58-billion) disposal programme announced by chief executive Mark Cutifani last year.

Mining groups are struggling to adapt to the slump in commodity prices, which has seen most resources hit multiyear lows.

This week, Glencore announced a radical plan to slash its pile of debt by around $10-billion (R137-billion).

Accendo Markets research head Mike van Dulken said: “The loss-making mines were the scene of violent clashes between striking workers and authorities in recent years amid labour unrest, power cuts and reduced output in the region, which has weighed on the sector.

“The announced sale should deliver improved financial performance for Anglo American after the commodi- ty market downturn and prolonged under performance of sector peers,” he said.

The sale could signal the start of a share price turnaround, he said.

Platinum producers have been suffering from weakness in prices, which slid below $1 000 an ounce in July for the first time since early 2009.

Meanwhile, community protests near the Mogalakwena mine in Limpopo operated by Amplats had not affected production despite most employees having been prevented from getting to work, the company said yesterday.

“But we are operating with a skeletal staff because the roads are being blocked,” Amplats’ Mpumi Sithole said.

She said the protesters were demanding jobs and the company was engaging with the communities to try and reach a resolution.

The mine is a mechanised operation which does not require as large a workforce as a conventional mine. – Reuters