LONDON/JOHANNESBURG (Reuters) – South Africa’s Sibanye-Stillwater (SGLJ.J) agreed to buy troubled miner Lonmin (LMI.L) (LONJ.J) for about 285 million pounds ($382 million) to create the world’s No. 2 platinum producer in a bid to ride out depressed prices for the metal.
Sibanye, whose CEO is called “Mr Fix It” for turning his firm from a spin-off with three old mines into a global precious metals player, said it would cut a third of Lonmin’s employees and deliver savings of about $112 million a year by 2021.
Lonmin, the world’s third biggest platinum producer, has burned through $1.6 billion in cash which was raised from investors since platinum prices plunged 60 percent from their peak in 2008. But it has still struggled to fund its mines.
Lonmin, with a century of history working in southern Africa, has lost 98 percent of its value since 2012, when 34 striking miners at its Marikana operation were killed by police.
“This is a bailout deal for Lonmin,” Nedbank precious metals analyst Leon Esterhuizen said. “It makes for a good match, but it doesn’t resolve oversupply of the PGM (platinum group metals) industry.”