Eurasian Natural Resources Corp., a Kazakh metal producer, has purchased 12 per cent of South AfricaÔÇÖs Northam Platinum for around R2.2 billion (Ôé¼223 million), it has been announced.
The move comes as Eurasian Natural Resources Corp. (ENRC) begins to diversify both its output and its geographical reach.
ENRC, one of the world's biggest producers of ferrochrome, acquired 44 million Northam shares from NorthamÔÇÖs parent company, Mvelaphanda Resources, for R50 each. The deal will cut MvelaphandaÔÇÖs remaining stake in Northam to 50.5 per cent.
The acquisition is expected to enhance ENRCÔÇÖs status as one of the world's leading miners of chrome, which for decades was treated as a waste product by platinum group metals (PGM) miners in southern Africa.
Northam's assets include the Zondereinde platinum mine, which produces some 300,000 ounces of PGMs per year, as well as the Booysendal project, whose first module is expected to be in full production by August 2014, with an annual output of 130,000 ounces.
The Booysendal project's estimated resources of over 100 million ounces make it one of the world's biggest undeveloped platinum deposits.
South Africa has more than 75 per cent of global PGM reserves. A global deficit is expected this year of platinum (used to reduce car emissions and to make jewellery), as its price has risen by 52 per cent over the past 12 months.
Commenting on the acquisition, Felix J Vulis, chief executive officer of ENRC, said: ÔÇ£The purchase of the interest in Northam is in line with our stated strategy of diversifying ENRC's commodity portfolio and its geographic exposure.
ÔÇ£The interest in Northam is a strategic opportunity to invest in one of the largest PGM miners in the world at a time when platinum is expected to benefit from increased demand and to face supply constraints.ÔÇØ
Analysts have indicated that ENRC may buy more Northam shares in the weeks to come.
Last year, ENRC bought Central African Mining & Exploration Co., which has copper operations in the Democratic Republic of Congo and a holding in the Bougai platinum deposit in Zimbabwe.
In February this year ENRC also agreed to buy 90 per cent of the Zambian copper producer Chambishi Metals.
It is thought that the sale of the Northam stake will allow Mvelaphanda to pay off most of its debt and clear the path for its planned unbundling. The company derived much of its earnings from Northam, and has most of its net asset value tied in the platinum miner.
Other companies that previously expressed an interest in Northam include Xstrata, Looming and Alisher Usmanov.
The transaction is expected to be completed in May.
