Sibanye May Buy South Africa Platinum Mines After Strike

Sibanye Gold Ltd. (SGL), South Africa’s biggest miner of the metal by production, will consider buying platinum mines once a strike over wages that’s crippling the sector is resolved.

“There’s nothing specific on the table right now, but we’re open to the idea” of buying platinum mines, some of which may go on sale after the strike, James Wellsted, a spokesman for the company, said by telephone today.

Anglo American Platinum Ltd. (AMS), Impala Platinum Holdings Ltd. and Lonmin Plc (LMI), the world’s three biggest producers of the metal, have said they may be forced to close shafts or sell assets in South Africa as a result of a strike that has entered its 11th week. Sibanye has been the country’s best-performing gold miner this year after it cut costs and negotiated a pay deal with unions.

“Our future is in South Africa and there’s a lot of potential to replicate what we’ve done with the Sibanye assets in the platinum sector,” Wellsted said. “There aren’t really any obvious, value-accretive opportunities to acquire gold assets unless one of the bigger companies puts their South African mines up for sale.”

Industry Restructuring

Sibanye was created in February 2013 when Gold Fields Ltd. (GFI) spun off its South African assets to insulate itself from strikes, low productivity and short mine lifespans in the country.

Sibanye Chief Executive Officer Neal Froneman boosted production at the company’s three mines by changing shift patterns and cutting costs, making lower-grade gold economically viable. He also negotiated a two-year pay deal with unions in September, bringing stability to the industry.

The company’s profit rose 53 percent in the second-half of 2013, compared with the first six months of the year, as production climbed and costs dropped. Sibanye’s shares have doubled in the past year, making it the best performer on the five member FTSE/JSE Africa Gold Mining Index.

“Platinum mining is very similar to gold -- deep, tabular, hard rock mining. They’re going deeper, but they haven’t gone through the restructuring that gold has over the last 20 years,” Wellsted said.

The Johannesburg-based Sunday Times newspaper reported Sibanye’s interest in platinum mines earlier today, citing an interview with Froneman.

Anglo American Platinum is considering whether it should keep its mines in South Africa’s Rustenburg area, CEO Chris Griffith said April 2. The Association of Mineworkers and Construction Union wants the producers to more than double wages within three years, while the operators have offered increases of as much as 9 percent. South Africa’s inflation rate was 5.9 percent in February.

To contact the reporter on this story: Kevin Crowley in Johannesburg at kcrowley1@bloomberg.net

To contact the editors responsible for this story: John Viljoen at jviljoen@bloomberg.net James Herron, Chris Malpass

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