The past 6 months saw corporate activity increase in the platinum industry with gold company Sibanye Gold acquiring Aquarius and Amplats’ Rustenburg mines valued at US$294 million and US$323 million respectively.
Baroka Platinum also acquired Atlatsa Resources’ 51 percent stake in Bokoni Platinum in a transaction valued at US$149 million. Expect to see companies in the platinum industry writing down assets to account for the expected slower recovery of the platinum prices and the reduction in supply (Lonmin plans to reduce output by 100koz, RBPlat put Styldrift on the back burner and Impala put its 17 shaft replacement project on hold). At this time, Lonmin was preparing for their AGM where the shareholders will be asked to approve a US$400 million rights issue, and they are also busy finalizing new loan facilities.
The focus of the South African miners, who hold about 80 percent of the world’s platinum reserves and produce more than half of the world’s platinum supply, currently remains on protection of the business for all stakeholders until the demand increases and prices recover. The strategies are all around efficiencies, cutting uneconomical output, cost containment and cash preservation.
“Expect to see companies in the platinum industry writing down assets to account for the expected slower recovery of the platinum prices and the reduction in supply.”
KPMG in South Africa