Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Impala Platinum Holdings Ltd. may make an offer to buy Royal Bafokeng Platinum Ltd. as early as next week as talks progress to create a platinum-group metals giant, people familiar with the matter said.
Implats said on Oct. 27 that it’s in talks with its smaller South African rival and that a deal may involve cash and equity. Flush with cash on the back of higher rhodium and palladium prices, Implats wants to expand by buying lower cost and mechanized assets as some of its deep-level operations near their end.
One of the main discussion points is the split between cash and equity that Implats may pay, said the people, who asked not to be identified because the talks are private. No final decision on price has been made, though Implats may pay a bigger premium if Royal Bafokeng accepts more equity than cash, the people said. Royal Bafokeng’s current market value is about $2.2 billion.
Spokespeople for Implats and Royal Bafokeng declined to comment.
Implats has long wanted to combine with Royal Bafokeng, and a deal would help the producer exploit synergies from deposits adjacent to its sprawling Rustenburg mining complex. It would also see the combined company mine about 3.45 million ounces a year, overtaking Sibanye Stillwater Ltd. and Anglo American Platinum Ltd. in terms of output, and rivaling Russian giant MMC Norilsk Nickel PJSC.
Other talking points for the potential deal include how the combined company would continue to meet obligations to surrounding communities and workers in South Africa, according to one of the people.
Royal Bafokeng is the mining investment arm of the Royal Bafokeng nation, a community of people based near the country’s Sun City resort.
(By Felix Njini and Loni Prinsloo)
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