The unsolicited approach for Northam Platinum disclosed this month could lead to further consolidation of South Africa’s platinum group metal industry, its CEO said on Friday, as the group reported a near eightfold rise in annual profit.
South Africa’s fourth-largest PGM producer, Northam said on August 25 it was inviting bids for a potential transaction after an exploratory approach by an unnamed major platinum miner in the country.
Bloomberg on Friday reported that bigger rival Valterra Platinum VALJ.J had made an informal approach to Northam. Valterra has declined to comment on the matter.
CEO Paul Dunne declined to give details during Friday’s results calls, but said Northam “will listen to what potential third parties have to say about structure as well as value”.
“If there was to be a transaction… that would lead to, potentially, further consolidation,” Dunne said.
Company to pay record dividend
Northam on Friday reported a sharp rise in headline earnings per share to 30.44 rand ($1.90) for the year to June 30, up from 3.81 rand a year earlier, driven by record production and higher metal prices.
That allowed the company to pay its highest-ever dividend, of 10 rand a share, a 400% increase from last year’s final payout.
Miners may look to consolidation and operational efficiencies to sustain platinum output.
Production in South Africa, which accounts for 70% of global output, is down 26% from its 5.3 million-ounce peak in 2006, as ageing mines, rising costs and years of underinvestment weigh on supply of the metals used to make devices to curb vehicle emissions.
While the platinum industry faces a long-term challenge from electric vehicles, which do not require autocatalysts, slower-than-expected EV adoption has eased near-term concerns about PGM demand.
($1 = 15.9981 rand)
(Reporting by Nelson Banya; Editing by Rashmi Aich and Jan Harvey)
