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Mining deal-maker eyes New York from 2021 as South Africa palls

Highlights

  • Power, water shortages deter South African investment: Sibanye
  • Shifting listing would allow Sibanye to widen investor pool

Sibanye Gold Ltd. Chief Executive Officer Neal Froneman is considering moving the South African miner’s primary listing to New York from 2021, after he curbs the company’s debt.

The surge in palladium and rhodium prices has put Sibanye on track to meet its debt-to-earnings target by the end of 2020, Froneman said in an interview at Bloomberg’s office in Johannesburg on Friday. While the rally has strengthened South Africa’s platinum industry, power and water shortages, rising crime and onerous regulations are deterring investment, the CEO said.

The plan to move Sibanye’s primary listing isn’t immediate and could still be two years out, after the company has sufficiently paid down its debt. The move is driven by commercial considerations and shouldn’t be construed as leaving South Africa, where some of Sibanye’s platinum mines could operate for more than 40 years, Froneman said.

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“Looking offshore for growth is just a logical extension of where we are now,” Froneman said. “No firm decision has been made, but I think if we are to grow, we would have to change our primary listing because there is no real growth in South Africa.”

Shifting Sibanye’s primary listing would expose the miner to a wider pool of investors and could also allow it to tap cheaper capital, said the CEO, who completed the acquisition of Lonmin Plc in May, less than three years after buying Stillwater Mining Co. in the U.S. Record palladium prices have made the Montana-based asset Sibanye’s “crown jewel,” Froneman said.

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“If you have a decent international portfolio of assets and you change primary listing, I daresay you get a re-rating because you become more acceptable,” he said.

Froneman’s deliberations come as AngloGold Ashanti Ltd. sells its remaining gold assets in South Africa, viewed as a final step before moving its primary listing from Johannesburg. Anglo American Plc CEO Mark Cutifani has said there is no shortage of opportunities in South Africa, but to attract mining investment requires political stability and regulatory clarity.

Miners are challenging aspects of the country’s revised mining charter — which seeks to address inequalities resulting from apartheid — in court. While Sibanye has no intention to exit South Africa, some of the charter’s provisions are sending “investors running away,” Froneman said.

“While we have the dispute in court, guess what, no one is going to invest,” he said.

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