Hi fellow splattered hamsters,
More pieces of the puzzle fall into place (see the following article). The SAf government wants what SUF and Implats are doing,...it results in jobs for their people. People with jobs, a roof over their head, food in their bellies and hope for the future don't go into the streets and create murder and mayhem. I have heard there are many more opportunities for SUF, to mine deposits the big boys have been keeping in the ground, and the following article certainly confirms that Anglo American, owner of Amplats and major shareholder of DeBeers should start considering SUF as a partner in more than just diamond mines.
SAf says use it or lose it, and give my people jobs. SUF says we have the knowledge and are ready to help out and make some money doing it. Implats motivation, which no one could understand before, is clearly outlined in this article. It is very profitable for them too.
I hear that SUF people have started the clock rolling on Messina this week. The agreements are being signed and SUF now has 120 days to make their minds up. In 4 months we will know whether SUF will mine Messina or not,...just in time for Xmas.
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Anglo American Platinum Falters in New South Africa: Spotlight
Bloomberg News
Aug 19 1999 5:22AM ET
Anglo American Platinum Falters in New South Africa: Spotlight
Rustenburg, South Africa, Aug. 19 (Bloomberg) -- Anglo American Platinum Corp. supplies 40 percent of the world's platinum, and
has enough reserves of the silvery white metal to last more than 50 years.
But even as sales of catalytic converters and jewelry boost platinum consumption, Amplats, as the company is known, is in trouble.
Its profit is growing slower and its costs rising faster than those of the No. 2 producer, Impala Platinum Holdings Ltd.
Now Amplats' biggest asset -- its vast reserves -- threatens to become its biggest headache. The government, seeking to cure a 40
percent unemployment rate, is considering a bill to pressure mining companies like Amplats to accelerate production of their
untapped reserves or risk losing them altogether.
''We are vulnerable,'' said Barry Davison, managing director of Amplats, which is 45 percent owned by Anglo American Plc, the
world's biggest gold miner -- and, through its 33.5 percent stake in De Beers, the biggest diamond producer.
Executives whose company's stock prices has risen 76 percent this year, as Amplats' has done, don't usually see themselves as
vulnerable. But Davison knows that while platinum sales are rising for a sixth consecutive year, spot prices have fallen 10 percent in
that time -- 5 percent in the last 12 months alone -- and government moves to accelerate production would drive prices down even
more.
That threatens Amplats more than its main competitor because Impala is beginning to make money from refining ore for others as
well as from mining itself; Amplats digs and processes only its own precious metals.
Earnings Forecasts
As a result, Impala's earnings are forecast to double this year while Amplats' profit, even after a 74 percent rise in the first half, are
expected to expand about 50 percent for the full year, according to analysts surveyed by IBES International Inc.
Impala's shares have soared 142 percent this year -- almost twice as fast as those of Amplats.
The government proposal to compel the industry, now mostly white owned, to hire more miners -- who are disproportionately black --
by speeding up production will hit Amplats harder than Impala. Its reserves are five times the size of those of its rival, making it
almost impossible to prove that it plans to use them all.
If Amplats heeds the government's wishes and produces more, it risks driving down prices. If it doesn't increase production, the
government threatens to seize Amplats' unused reserves and give them to other companies willing to dig them up in a hurry. That
also would depress prices -- and reduce Amplats' revenue.
''There's not much point in expanding supply just for the sake of it,'' said Mike Steel, the market-research director at London-based
Johnson Matthey Plc, the world's biggest precious metals refiner. ''The price may go down and South Africa's revenue may not
change.''
Taking Its Toll
Impala not only is less at risk than Amplats because of smaller reserves, it may actually benefit from the government's plan,
analysts said. It has a subsidiary that for a fee refines ore mined by companies too small to afford processing plants of their own -- a
service called ''tolling.'' Companies that would need tolling are just the outfits to which the government would allocate reserves that it
would take from Amplats.
''Barry (Davison) is blowing off his toes on the right foot, while Impala is blowing them off on the left,'' said Peter Major, a fund
manager at NIB Asset Management in Cape Town who invests in mining companies.
Davison, whose says his company won't refine ore for others, hasn't said how Amplats will respond to the government proposal,
which is being debated by the South African parliament. At an analysts' briefing in March, he suggested he would prefer to increase
production rather than lose reserves.
Already Amplats is opening new mines and expanding existing ones to boost annual platinum output by 24 percent to 2.3 million
ounces. Davison recently said Amplats will, by the end of this year, announce projects to increase production by another 350,000
ounces.
Impala Preferred
That, at least, would give the least benefit to Impala. Its new tolling unit, Impala Refining Services, can refine 500,000 troy ounces of
platinum a year, 12 percent of global consumption. >b>''We can make almost as much money tolling as operating our own shafts,'' said
Steve Kearney, Impala's managing director.
Impala's strategy leads some investors to conclude it will continue to outperform Amplats. ''If I buy Impala, I get a leaner and meaner
company,'' said Major.
At about 192 rand, Impala stock trades at 24 times earnings per share. Amplats, at 137 rand a share, has a price-to-earnings ratio of
14. This suggests investors as well as analysts see more growth potential in Impala.
Recently, that view has been right. In the six months ended Dec. 31, 1998, Impala's earnings grew 136 percent, almost twice the
percentage gain posted by Amplats.
Amplats's problems come at a particularly delicate time for its parent, Anglo American. In May, Anglo moved its headquarters to
London from Johannesburg to help get more investment to fund a push into non-precious metals, such as copper, zinc and nickel. It
listed its stock in Britain and plans to list in Switzerland as well.
In particular, the government's effort to redistribute South Africa's wealth to the black majority ''is not well understood in London,''
said Mark Horn, an analyst at T. Hoare Canaccord in London. When investors realize the full import of this, he said, it could hurt
Anglo American's share price.
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