[miningmx.com] — UNTIL now, it has been generally accepted that
Impala Platinum and rival Anglo American Platinum would be the last ones to scrap it
out in the consolidation of the Bushveld’s Western Limb, specifically the area
between Impala’s No. 20 shaft and the Pilanesberg.
This area of high-grade Merensky-bearing properties is currently home to the mines
and development projects of Toronto-listed Platinum Group Metals (PTM), Wesizwe
Platinum, as well as Royal Bafokeng Platinum (RBPlat). For years, it has offered the
promise of becoming a single consolidated block.
Most believe it’s just a matter of time before Impala revisits its bid for RBPlat – its
previous attempt was scuppered by minority shareholder, AngloPlat; much to the
chagrin of RBPlat parent company, Royal Bafokeng Holdings. But a fresh offer can only
happen once Anglo Platinum’s veto right over RBPlat’s corporate transactions lapses
in December 2012.
Yet, when China’s Jinchuan Group announced its intention to take a major share in
Wesizwe, it also changed the dynamics of how the consolidation process would pan
out.
In a recent column Miningmx contributor David
McKay explained how Chinese investment was not a matter of commercial entities
sealing good business propositions, but rather an extension of the government’s
search for means to fuel the country’s economic ascent.
Jinchuan’s priorities in the Western Limb will centre more around securing PGMs for
China’s domestic needs than attaining optimal investments, and will therefore
probably seek to expand its foothold in the area. This is unlike the Canadian backers
of PTM, for instance, who wouldn’t experience any serious losses should they sell out
at a premium before producing even one ounce of platinum.
RBC Capital Markets analyst Leon Esterhuizen, who last year wrote a much-publicised
report on consolidation in South Africa’s platinum industry, says the ideal combination
– in terms of the area’s geology – would be the assets of PTM, Wesizwe and RBPlat.
An “easy’ first step would probably entail Wesizwe (Jinchuan) taking out PTM.
Wesizwe is already PTM’s partner in the Western Bushveld projects, in which it holds
a 26% stake.
The more interesting play will be whether Jinchuan emerges as a competitor to
Impala in the race for RBPlats, Wesizwe’s immediate neighbour – with the Styldrift
shaft within close view of the Frisch-Ledig development. That would imply a R3bn
company (at present value) taking over a R10bn rival, although one has to assume
that AngloPlat would be inclined to sell to just about anything other than Impala.
But such a move would also assume RBPlat turning its back on Impala, in which RBH
already owns 13%. Surely that’s unlikely, given that an equity deal would significantly
enhance its stake in a group with much further reach and greater resources than
Jinchuan will have for many years to come?
There are other permutations of what could happen, but it comes down this: that
piece of land is strategically critical to the futures of both Impala and AngloPlat.
Impala is probably best positioned to eventually snap up RBPlat, although Anglo
Platinum still has a significant say in that company, as well as an enlarged Wesizwe
(Anglo holds 13% in Wesizwe following the Jinchuan transaction).
The deciding factor in who gets what may no longer lie in some compromise between
the heavyweights, but in who makes the best overtures to Jinchuan.
The Chinese mining giant has deep pockets and an insatiable appetite for platinum. It
is not scared to throw money at the assets it desires, as was demonstrated by its
R9.1bn bid for Metorex and the favourable funding terms it offered for the
development of the Frisch-Ledig project.
It is safe to say that it has become the kingmaker in the Western Bushveld.
