Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Polymetal Sees Platinum Attractive Amid South African Strikes

Don't Miss Out —
Follow us on:

Dec. 18 (Bloomberg) -- Polymetal International Plc, Russia’s largest silver producer, bought its first platinum field and said it sees metal as promising for diversification.

“We see platinum as attractive metal especially given the recent events in South Africa,” Vitaly Nesis, chief executive officer said by phone today, referring to labor strikes in that country. Polymetal, which also mines gold, said today it agreed to pay $10 million for the Svetlobor platinum exploration project in Russia’s Sverdlovsk region.

Platinum output worldwide dropped by about 10 percent, or 600,000 ounces, this year through the third quarter, compared with the same period in 2011, according to Johnson Matthey Plc data. More than 500,000 ounces of the decline was in South Africa, where strikes over pay have shut some mines. That has helped drive up the metal’s price by 16 percent this year to $1,612.30 per ounce.

Polymetal, with central offices in St. Petersburg, said it paid with shares to purchase 24.99 percent in Svetlobor, while VTB Capital acquired the remaining stake. Polymetal plans to buy VTB’s stake once regulatory approval is granted, it said. The transaction will be fully paid by exchanging 0.14 percent of newly issued Polymetal stock, according to the statement.

Svetlobor provides “a unique opportunity” among other advantages, as is located in an area where Polymetal has developed infrastructure, Nesis said. The project is at an early stage of geological exploration with about 20 wells drilled in 2005-2010, he said. Between 1824 to 2003, more than 7 million ounces of platinum were recovered in the area by placer miners, Polymetal said in a statement on the purchase. This may indicate a substantial amount of ore resources, according to Nesis.

Resources Audit

Polymetal company would “be glad” to look into other platinum resources, but it doesn’t expect that a good opportunity may occur soon, according to Nesis.

“Although this will have next to no impact on the near-term outlook for the company, the potential diversification into platinum is an interesting strategic move,” which also highlights the value potential for platinum assets outside of South Africa or Zimbabwe, Nomura said in a note today.

Shares in Polymetal rose 0.9 percent to 1,192 pence in London trading today as of 4:00 p.m. local time.

OAO GMK Norilsk Nickel is the largest producer of platinum in Russia.

To contact the reporter on this story: Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.