Northam Platinum has accelerated its buyout of its BEE partner, in a proactive plan to mitigate potential losses. The Platinum producer is looking to the future when, in 2025, Black shareholders can divest. This could leave Northam with the financial burden of paying out for the loss in share value since Zambezi Platinum invested in Northam in 2015. Zambezi currently owns 46.7% of Northam at a market value of R6 billion. The platinum producer has a market cap of around R83 billion. In August the company announced a record full year performance for the financial year ended in June 2020. Full year revenue stood at R17.8 billion with net debt of R3.3 billion. Northam also estimated a Covid-related production loss of 108.7Â million ounces. – Melani Nathan
Northam in talks to quicken buyout of black investors’ stake
(Bloomberg) – Northam Platinum, the producer of the precious metal that’s been buying back shares from its Black empowerment partner, said it’s in talks to bring the arrangement to an early conclusion.
South Africa’s fourth-biggest platinum producer has already bought 70% of preference shares held by Zambezi Platinum. That reduces a potential liability in 2025 when the Black investors are permitted to divest; Northam would need to pay the difference if the shares fell below their initial acquisition price of R41 or $2.53 each. Still, it’s hindered the company from paying ordinary shareholders dividends. The shares closed trade in Johannesburg at R158.65 on Monday.
“Northam has taken the initiative to enter into proactive discussions with Zambezi Platinum with a view to secure a successful and sustainable outcome,” Chief Executive Officer Paul Dunne said in a statement on Monday. The company could maintain its Black shareholding levels through the deal, the company said in the same statement without giving more detail.
Read also: Northam Platinum buy-out proposal raises concerns BEE benefits elite
South African mining companies are compelled by law to be partially Black-owned, a measure taken to try and spread the country’s wealth to the Black majority, who were largely excluded from economic activity during apartheid.
If completed, the deal could benefit Lazarus Zim, Sipho Mseleku and Brian Mosehla, the sole directors of three companies that own 55.4% of Zambezi. Zambezi, held a 31.4% in Northam, a stake currently valued at about R25 billion or $1.5 billion, at the time of the initial arrangement in May 2015.
Black economic empowerment has been a key pillar of African National Congress policy since the party came to power in 1994.
Mining empowerment laws, first enacted around 2004, have attracted criticism from opposition parties and labor unions as many deals have done little to narrow inequality in the country. They have accounted for the increase in wealth of a few Black businessmen including Patrice Motsepe, South Africa’s only Black dollar billionaire, and Cyril Ramaphosa, the country’s president.
