Sibanye’s Lonmin bid gets nod

By Allan Seccombe

Competition Commission recommends deal, but sets conditions on jobs, social compacts and procurement

Resources Writer

Sibanye-Stillwater’s all-share bid for world number three platinum miner Lonmin cleared an important hurdle on Monday.

The Competition Commission recommended the transaction with conditions, particularly on job losses and procurement deals. The recommendation will be considered by the Competition Tribunal, which has the final say on the transaction that will make Sibanye one of the world’s leading sources of platinum group metals (PGMs).

Key assets in the Lonmin takeover are its concentrators, smelters and refineries, which give Sibanye the rare advantage of being a mine-to-markets operator in the SA PGM space.

Only Anglo American Platinum and Impala Platinum have the entire pipeline under their control, while Northam Platinum has a long-standing agreement with Heraeus to refine its metals.

Sibanye has already bought Anglo American Platinum’s Rustenburg mines and the neighbouring Aquarius Platinum assets. By acquiring Lonmin, Sibanye ties up a vast chunk of PGM-rich real estate around Rustenburg, adding to its palladium and platinum mining, recycling and refining assets in the US. It will also make Sibanye the world’s second-biggest platinum producer after Anglo American Platinum.

“The commission found that the merged entity is unlikely to exert market power in any of the PGM markets affected by the merger as both merging parties have relatively low market shares in these international markets,” the commission said.

Among key commission concerns were the loss of up to 3,000 jobs it calculated would result from Sibanye taking over Lonmin’s mines and processing plants, the continuation of procurement deals Lonmin has with communities and other smaller parties, as well as agreements with the Bapo ba Mogale community and continuation of social and labour plans.

The job losses were over and above the 12,600 positions Lonmin has said it is cutting over a three-year period as a result of closing old, depleted and unprofitable mines.

The commission said one of the conditions of its approval of the deal was the creation of three & short-term mining projects which are earmarked to avoid retrenchments” The employment savings on two of these three projects are likely to materialise in the event that platinum prices increase in future and mining costs are maintained at certain levels” the commission said.

The commission said Sibanye had to continue with Lonmin’s procurement deals with black-owned companies and individuals.

Lonmin and Sibanye shareholders have to vote their approval of the transaction that will give Lonmin shareholders 11% of the merged companies.

Managements of both companies have said they expect the deal to be finalised before the end of 2018.

This article provided by NewsEdge.