{Equity Axis News} - FLUSH with cash on the back of firm global metal prices, top South African mining corporations are on a blitz to further their investments, a move which is critical in consolidating their positioning in the ever-evolving global economic environment.

The previous week saw top miners, Impala Platinum Holdings (Implats) and Sibanye-Stillwater (Sibanye), announce major investment deals that will undoubtedly further strengthen their top-end status.

Impala Platinum Holdings mines, refines and markets platinum, palladium, rhodium, nickel, and related metals. The company's primary mining operations take place in South Africa and Zimbabwe - with an 87% ownership stake in Zimplats.

Sibanye-Stillwater is a South Africa-based producer of precious metals. The company develops and extracts mineral properties. It maintains operations in North and South America as well as Southern Africa. It also poses a 50 percent holding in the Zimbabwe-based Mimosa Mine.

Sibanye snaps 100% ownership in Brazil’s low carbon intensity mines

During the previous week, Sibanye made further inroads into the green metals industry with the US$1 billion acquisition of both the Santa Rita nickel mine and the Serrote copper mine in Brazil from private-equity fund Appian Capital Advisory.

Santa Rita is one of the largest nickel-cobalt sulphide open-pit mines in the world, located in the State of Bahia, Brazil and includes a preliminary economic assessment (PEA)–stage underground project. Meanwhile, Serrote is an advanced and pre-developed open-pit copper mine with a current reserve life of 13 years and significant resource and optimisation potential. The mine is currently in a ramp-up phase of approximately 18 months and is on track to achieve commercial production in the fourth quarter of 2021, having completed construction in May 2021, with world-class safety records. 

Both Santa Rita and Serrote are marked as low-cost and low carbon intensity operations with strong cultural alignment with Sibanye–Stillwater’s focus on health and safety, the environment and local communities.

“The transaction is a significant additional step in Sibanye–Stillwater’s ongoing strategy to position the business for continued value creation during our transition into a climate change resilient business, and follows and complements the Keliber, Sandouville and Rhyolite Ridge transactions announced earlier this year,” Neal Froneman, CEO of Sibanye said.

“The transaction represents a unique opportunity for Sibanye–Stillwater to acquire significantly pre-developed and pre–capitalised, low–cost, producing nickel and copper assets with strong ESG credentials, which will continue to be managed by a high–quality team with a wealth of operating experience in Brazil.”

Sibanye completes US$70 million strategic investment in ioneer

To wrap up the week in style, Sibanye also announced that it has successfully completed its US$70 million strategic investment in ioneer Limited (ioneer) following approval by ioneer’s shareholders at an Extraordinary General Meeting on 21 October 2021, with 99.9% of the votes cast in favour of the transaction, and approval from the Financial Surveillance Department of the South African Reserve Bank.

Back in September 2021, the two companies agreed on a $490 million deal which will see Sibanye buying half of ioneer Ltd’s Nevada lithium mine project.

Lithium is a key active material in the rechargeable batteries that run electric cars. Demand for electric vehicles is skyrocketing in line with the global push for a carbon emission-free environment.

Implats eyes top PGMs producer status

Impala Platinum Holdings is pushing to become Africa’s largest platinum group metals producer.

Implats which owns 87% of ASX-listed Zimplats, the biggest PGMs miner in Zimbabwe, announced last week that it is in talks to buy Royal Bafokeng Platinum Limited, in a deal that could elevate it to South Africa’s largest platinum group metals (PGMs) producer.

Anglo American Platinum, whose assets are mostly located in the Bushveld Complex of South Africa (including the world's largest open-pit PGM mines Mogalakwena, Mototolo and Amandelbult) and Zimbabwe (Unki mine) is considered the largest mining company headquartered in Africa.

A deal between Implats and Royal Bafokeng would see the combined company mine about 3.45 million ounces a year, overtaking Sibanye and Anglo-American Platinum Ltd. in terms of attributable PGM output.

Royal Bafokeng is the mining investment arm of the Royal Bafokeng Nation, a community of people based near South Africa’s Sun City. It was listed on the Johannesburg Stock Exchange in 2010.

Back home, Zimplats, Zimbabwe’s leading platinum miner, on Thursday signed a Memorandum of Understanding with the Ministry of Mines signalling an intention to invest a total of US$1.8 billion over the next seven years towards mine expansion, as well as the establishment of a base metal refinery.

The envisioned investment, according to Zimplats’ CEO Alex Mhembere, will see replacement of depleting mines such as Rukodzi, Ngwarati and Mupfuti mines. Significantly, it will result in the creation of jobs.

Commentary:

PGMs – which constitutes a significant chunk of both Implats and Sibanye’s mining output, saw prices slowing down from the second quarter of 2021, after a bullish start to the year. The price slowdown is largely an effect of semiconductor shortages which has curtailed automotive production, thus reducing demand for PGMs loadings.

The cut in global vehicle production will most likely see a pileup in stocks, and this may shift prices to buyers’ favour, using the supply and demand dynamics. Implats’ move to snap up control of rival, Bafokeng is quite telling. It shows that there is still an appetite for PGMs assets despite the drag-on effect exerted by chip shortages on the automotive sector.

Raynold Mhotseka is the News Editor for Equity Axis with a keen interest in mining, business, economic and financial trends.

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