Mining Weekly

RANDFONTEIN (miningweekly.com) – As South Africa’s top three platinum producers deal with the country’s longest and most costly labour unrest, JSE- and NYSE-listed Sibanye Gold CEO Neal Froneman on Wednesday said the platinum industry was now ripe for – and in fact needed – consolidation.

Beleaguered platinum majors Lonmin, Impala Platinum (Implats) and Anglo American Platinum (Amplats) remained locked in a volatile environment exacerbated by the five-month strike by their employees, with platinum juniors seemingly waiting in the wings to potentially make a play for the platinum assets.

Speaking at an investor and stakeholder presentation, in Randfontein, Froneman said the platinum sector was 10 to 15 years behind the gold sector in terms of consolidation and the latest difficulties hampering the sector could accelerate potential acquisitions.

A weak price environment and labour unrest, besides other factors, were putting balance sheets under strain, forcing the majors to adopt a different strategy and, in turn, creating acquisition opportunities.

“Companies have made it clear that they plan to exit the platinum sector and are seeking responsible operators to take over,” said Froneman.

Amplats earlier suggested it might divest underperforming platinum assets and shortly thereafter reports emerged that Sibanye might be the junior to bring life back into those operations.

Froneman stated that Sibanye, which earlier expressed interest in buying the embattled units to diversify into platinum, was well positioned to leverage this.

“We believe the world is recovering and this will drive the aspect of platinum group metals (PGM) growth. The PGM market is robust,” he averred.

The platinum industry, which shared many similarities with the gold industry in terms of medium-depth, tabular and hard-rock mining and the labour-intensive environment using conventional mining methods, fit into Sibanye’s South Africa-focused strategy.

Meanwhile, the company was currently assessing ways to ensure it listens to “all its stakeholders” to better respond to its employees’ needs.

Froneman noted that the strikes were, in part, driven by an inadvertent “lesser importance” that was placed on some stakeholders, as companies in the mining industry attempted to balance the needs and demands of government, investors, communities, trade unions, business and workers.

“It is not the quantum of the wages [that was leading to strike action] but the take-home pay … with many workers heavily indebted,” he explained.

Sibanye has started a financial education programme to assist its employees in better understanding finances and how to better manage their money. The company was also looking at ways of assisting its indebted employees to get back on their feet through commercial loans.

In addition, it was looking at other issues contributing to labour ills, including housing options and alternate and additional shift programmes to enhance productivity and profitability and to limit disruptions.

Sibanye said it would fully assess the opportunity of buying into the platinum assets, which would have to meet all internal investment criteria and underpin the company’s dividend strategy.

“We are not desperate to run into platinum. We see it as an opportunity … but if it does not happen, we are happy where we are,” Froneman stated.