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Views Article – Sharenet Wealth

Share Picks, South Africa

Sibanye: Leading The Pack In Overseas Investment

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It is a crying shame that South Africa’s once proud mining industry should be so demoralised by the current mining charter and other government interventions that our top mining companies prefer to invest overseas rather than plough the money back into their own country.

First out of the block is Neal Froneman’s Sibanye Gold Mining, who last month snapped up the largest PGM mine in America for $2.2 billion.

It was an outrageous buy, and Sibanye shareholders will benefit from years and years of dollar earnings from debt-free Stillwater, the American purchase.

At the time of the rights issue, the share price dropped in line with the rights issue discounted price of 60%.

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Hard on Sibanye’s heals was Northern, the large SA platinum mine. Northern scooped up a liquidated PGM miner in America for $10 million, which once reorganised by Northern, will no doubt get them into the big and lucrative American market.

Northern, like Sibanye, will also be the proud recipient of US dollars further down the line.

One waits to see who is next?

But the choice is not hard to make. There is nothing but confusion for SA gold miners trying to make a living here in SA.

The government’s proposed mining charter, now on its third reading, is probably the last disincentive the mining market wanted.

It comes after years of increased wages; theft of whatever the mine was producing, be it gold or platinum; and continuing government intervention.

Though no mining house is prepared to say so, the difficult business of running a mining venture in SA has finally caught up with the government, who have no choice but to sit back and watch its mining industry invest overseas rather than in SA.

One local mining analyst, who prefers not to have his name mentioned, said on Friday that “the mining industry in SA is a mess. Apart from the political uncertainties caused by President Zuma and his Gupta confidants, the mining industry is besieged by its own problems.

Big among these are the almost annual negotiations for wage increases and labour strikes which have plagued the mining industry for many years.”

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Jeremy Woods

Jeremy Woods trained for three years as a journalist on the Herts Advertiser, St Albans, in the U.K. Once qualified, he left England to work as a crime reporter on the Vancouver Sun in Canada. After three years, he worked for the Los Angeles Times as a trainee financial journalist, spending most of his time reading company accounts and finding publishable stories in them. He moved to South Africa and for the last five years in journalism worked for the Sunday Times, Business Times, as Investment Editor. He has also published a financial thriller called “Special Payments”, which was a best-seller on publication, and optioned three times for a film.


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