Stillwater-Lonmin deal gets nod

By dineo.faku Time of article published Sep 18, 2018

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JOHANNESBURG – The long-awaited R5 billion merger between Lonmin, the second-biggest platinum producer in the world, and Sibanye-Stillwater received a major boost yesterday when it got a conditional nod of approval from the Competition Commission.

The commission gave the deal the green light on condition that Sibanye establishes three short-term mining projects as part of its contribution towards promoting employment.

The recommendation comes amid fears that the proposed transaction raises significant public interest concerns, including a possible jobs bloodbath and procurement from historically disadvantaged persons, the commission said.

It also said that existing arrangements with the BEE Bapo ba Mogale Community and compliance to Social and Labour Plans (SLPs) also spooked the public.

“In respect of employment, the commission found that the proposed merger results in a substantial negative impact on employment, given that more than 3 000 employees are likely to be retrenched as a result of the proposed merger. To mitigate the impact of such retrenchments, the commission imposed a condition that Sibanye embark on three short-term mining projects which are earmarked to avoid retrenchments,” the commission said in a statement.

It said that the employment savings on two of the three projects were likely to materialise in the event that platinum prices increased in future and mining costs were maintained at certain levels.

Platinum companies have been squeezed by rampant cost increases in a depressed price environment. Last month, Impala Platinum announced 13 000 job cuts over the next two years as it scales down on loss-making ounces.

The commission also wants Sibanye to implement an Agri-Industrial Community Development Programme in Rustenburg, in the North West, subject to results of a feasibility study of its viability in the area.

The merger was approved by the SA Reserve Bank in May. Last December, Sibanye-Stillwater announced plans to buy Lonmin to make it the world's second-biggest platinum producer, and also said it planned to cut about 12 600 jobs over the next three years, with a further 890 positions also at risk.

The commission also recommends that Sibanye continue to honour the contracts of Lonmin’s existing historically disadvantaged suppliers and also endeavour to continue to procure from local suppliers.

“With regard to the existing arrangements with the BEE Bapo ba Mogale Community and adherence to SLPs, the conditions oblige Sibanye to continue to honour these arrangements”.

The commission noted, in terms of horizontal overlaps, that both Sibanye and Lonmin produced platinum group metals (PGMs) which were further refined in companies such as Anglo American and Impala Platinum, and sold to international markets.

“The commission found that the merged entity was 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,” said the commission.

It ruled out the possibility of foreclosure concerns since the merged entity was unlikely to have incentives to foreclose upstream PGM concentrate producers.

Blessings Ramoba, president of the Mining Forum of SA said that the recommendations were a disappointment.

“We are disappointed that they (commission) did not do a thorough investigation of our allegations into the failure of Lonmin to meet its obligations to the Marikana community."


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