Listing Amplats mines ‘bad idea’
THE listing of Anglo American Platinum’s Rustenburg and Union mines is a bad idea and will likely fail to find traction with investors, says Neal Froneman, CEO of Sibanye Gold.
THE listing of Anglo American Platinum’s (Amplats’) Rustenburg and Union mines is a bad idea and will probably fail to appeal to investors, says Sibanye Gold CEO Neal Froneman.
Sibanye, the largest miner of South African gold, is one of the parties shortlisted by the world’s biggest platinum producer as a possible buyer of the mines.
Amplats was running a parallel process to set up the mines as a separately listed entity, CEO Chris Griffith said last week, and if the buyers were not prepared to offer what Amplats considered to be fair value, the assets would be listed on the JSE.
The listing could take the form of a reverse listing to simplify the process, said Rene Medori, chief financial officer of Anglo American, which owns 80% of the platinum miner.
Arguing the two mines were not cash-generative and needed a large investment, Mr Froneman said the market was unlikely to support a listed entity owning the mines in the current weak price environment.
“I’m very sceptical a listing would be a good outcome for Amplats shareholders,” he said, comparing a potential listing of the two mines to the unbundling of three mines by Gold Fields into the newly listed Sibanye.
“Sibanye started our new life with assets that were strongly cash-generative and that, to me, is the primary difference between the two sets of assets,” Mr Froneman said.
“I think a listing would be very difficult to get away in the current equity markets,” he said, and the sale of the two mines piecemeal would not create sustainable companies.
Sibanye wanted to buy both mines, he said. The view in the gold company was that the platinum price was likely to remain soggy for at least two more years, a view not shared by Mr Griffith, who last week outlined a scenario of an improved market and price environment in a shorter time frame.
Glencore is unbundling its 24.9% stake in platinum miner Lonmin. Asked whether Sibanye had spoken to Glencore about buying the stake, Mr Froneman said: “We’ve been through many doors to talk about options.”
On pending wage talks in the gold sector, Mr Froneman said ideally both sides should meet before formal talks started. “Outside the negotiation forum we need to understand each other’s positions. We need to understand the challenges the unions are facing and they need to be receptive to the challenges the industry faces. It’s very difficult to do that during wage negotiations,” he said.
Mineral Resources Minister Ngoako Ramatlhodi has met the gold companies’ CEOs as well as the union bosses to understand issues on both sides. If preliminary talks are held ahead of wage negotiations that start in April, he would make a sensible facilitator of that engagement.
Sibanye had to suspend its Beatrix mine in the Free State for a few days this month because of clashes between members of the National Union of Mineworkers (NUM) and the Association of Mineworkers and Construction Union (Amcu).
Amcu has made large gains in membership in the gold sector after wresting control of platinum mines around Rustenburg from the NUM. Amcu has gained enough support to be a major player at this year’s wage talks. It represents at least 25% of unionised workers on gold mines, from 17% when it entered gold talks two years ago.
“We’ve got to realise the competitive position the NUM and Amcu find themselves in and to not feed off that,” Mr Froneman said.