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.
South African mining dealmaker Neal Froneman is considering retiring in two to three years time, but would first like to double the size of Sibanye Stillwater Ltd.
Froneman built Johannesburg-based Sibanye into a company with a market value of more than 182 billion rand ($11.9 billion) by purchasing gold, platinum and palladium mines in southern Africa and the U.S. Now the 61-year-old is looking for acquisitions in battery metals, before handing over to a successor.
“I would like to see the company’s size double to a $20 billion market capitalization plus before I move on,” Froneman said in an interview from his farm in South Africa’s Limpopo province. “Two to three years sounds like a good innings and I think we can deliver quite a lot in terms of our strategy.”
Nicknamed Mr. Fix-It for turning around some of South Africa’ aging gold mines, Froneman has identified opportunities in nickel, copper and lithium and may announce a deal this year. The company is also looking to acquire more gold assets, though high valuations are currently a deterrent, the CEO said.
“M&A is what we are good at,” Froneman said. “We have created value and we are going to continue to create value in the right way at the right time.”
Froneman re-jigged Sibanye’s management structure last year, appointing long-time ally Richard Stewart to a new position as chief operations officer. At 45, Stewart is the youngest member of Sibanye’s executive team, and the geologist helped forge the company’s platinum-group metals businesses.
“Richard and I work well, he is entrepreneurial, he has got a solid technical background but it’s a broader team that impacts our business,” Froneman said. “Richard is certainly one of the potential successors but there are others.”
Stewart might need time to gain executive management experience, according to Mandi Dungwa, an analyst at Kagiso Asset Management Ltd. in Cape Town.
“They are creating quite a large global business, that’s where potentially Richard would fall short,” Dungwa said. “But having a COO position probably gives him that experience and if he is able to do well that would be a good indication to the board. Its like a dress rehearsal for the potential job.”
(By Felix Njini)
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