Sibanye Believes Platinum Opportunities are on the Horizon

South-African mining company Sibanye Gold believes the platinum industry is ready for consolidation. With the top three South African platinum producers dealing with lengthy and costly labor unrest, the company’s CEO Neal Froneman says the time is now.

Platinum companies such as Lonmin, Impala Platinum (Implats) and Anglo American Platinum (Amplats) have been hit hard by a five-month strike by their employees, which has stopped production, allowing junior mining companies the ability of making a play for the platinum assets.

Froneman believes the platinum sector is 10 to 15 years behind the gold sector in terms of consolidation. The weak price environment complied with labor issues has put balance sheets under strain, forcing many companies to rethink strategies. The current state of platinum has created an abundance of possibility for acquisitions.

“Companies have made it clear that they plan to exit the platinum sector and are seeking responsible operators to take over,” said Froneman at a recent investor and stakeholder presentation in Randfontein.

Companies like Anglo American Platinum have suggested it could separate itself from its underperforming assets, which leads many spectators to believe Sibayne Gold could in the running to bring those operations back to life. The company has expressed interest in the past about buying struggling units to diversify into platinum.

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

The platinum industry shares many similarities with the gold industry making it ripe for Sibayne’s South Africa-focused strategy.

The company is fully assessing opportunities to emerge into the platinum industry and will review any possible acquisition if it meets its internal investment criteria and 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.