The world is changing fast and to keep up you need local knowledge with global context.
EDINBURGH — Sibanye-Stillwater boss Neal Froneman, a South African businessman with a reputation for fixing problems, has captured the attention of the London investment community. A move to snap up Lonmin, a former giant that is on the brink of collapse, will mean that Sibanye-Stillwater becomes the world’s second-largest producer of platinum. It’s exciting for a company to become a dominant player in an industry, but it’s also risky. Platinum prices are in the doldrums with no obvious spark to get the metal moving back up again any time soon. Froneman’s not afraid, though. If he gets this deal through the approvals process, he has plans to expand through acquisition in the gold sector. – Jackie Cameron
By Thulasizwe Sithole
Known as Neal ‘the deal’ Froneman, the South African-born mining engineer who heads Sibanye-Stillwater has London investors buzzing.
Sibanye-Stillwater has been on the acquisition trail and looks set to become the second-largest producer of platinum in the world if its move to buy Lonmin is approved by shareholders and regulators.
This was underscored by the Financial Times, which has run an in-depth report on Froneman’s business moves over the past five years. He has built Sibanye-Stillwater on a base of unwanted gold mines spun off from Gold Fields.
Sibanye has launched four takeovers since 2015, says the publication, with its boldest move yet a £285m all-share offer for Lonmin – which is teetering on collapse.
The FT, a global financial newspaper, cautions that the Lonmin deal ‘comes with considerable challenges’. Thousands of jobs will be chopped, which could spark resistance from politicians and trade unions in South Africa.
Labour issues will not be Froneman’s only headache. The future of platinum as an industrial metal is uncertain because it is not needed in electric cars, reports the FT. The platinum price has fallen by one-third over the past six years and shows “no signs of recovering”.
The company also has a large debt load connected to the purchase of US palladium and platinum miner Stillwater in 2016.
“The Lonmin deal will not add to its borrowings, it will increase Sibanye’s exposure to the platinum price,” says the FT.
The real benefit for Froneman of the Lonmin deal is that its refineries will enable Sibanye to become a ‘mine-to-market company’.
If the Lonmin deal comes off, Sibanye will start scouting around for a gold deal in North America, he said.