South Africa's Exxaro says might look at Amplats' assets

JOHANNESBURG Wed Apr 9, 2014 4:49am EDT

JOHANNESBURG (Reuters) - South Africa-based coal producer Exxaro (EXXJ.J) hopes to diversify into platinum group metals (PGMs) and is looking at opportunities which could include assets Anglo American (AAL.L) has signaled it might divest.

"We scouted around in PGMs and think there are some interesting opportunities that are emerging," Mzila Mthenjane, Exxaro's executive head of strategy, told the Reuters Africa Investment Summit on Wednesday.

"It's across the whole board, from existing single assets that are being developed to potentially what could fall out, with some of the restructurings that are being spoken about," he said, referring to the expected shakeout at Anglo American Platinum (AMSJ.J) after a massive strike finally ends.

The strike at Amplats, Impala Platinum (IMPJ.J) and Lonmin (LMI.L) is in its 11th week, has cost the producers over $1 billion in lost revenue to date, and shows no signs of ending soon with the sides poles apart on the issue of wages.

A drastic post-strike overhaul is looking certain for the industry and Anglo American has signaled it could divest some of its loss-making platinum assets including its strike-hit Rustenburg operations northwest of Johannesburg.

Bullion producer Sibanye Gold (SGLJ.J) also said this week it might be interested in snapping up some of those assets.

In the case of Amplats' Rustenburg operations which were bleeding cash even before the strike, it could be a buyer's market at the moment.

Mthenjane stressed, however, that Exxaro wouldn't rush into any deals: "I think at the moment we are likely to focus more on the existing portfolio, it would have to be a really good deal for us to look at a new commodity".

"That's an industry that's faced with its challenges. One would also have to take a view as to what's on the other side, when the dust has settled around the industrial relations issues," he said.

Exxaro's portfolio includes its South African coal assets and a stalled iron ore project in Republic of Congo.

Exxaro said it would not allocate more funds for its iron ore project in Congo until it finalizes agreements on the usage of rail and port facilities when production starts.

Mthenjane said Exxaro was hopeful those agreements would now be signed by the middle of this year, saying both sides had a "sense of urgency" regarding the issue.

Exxaro, which acquired the Mayoko project in 2012 as part of a takeover of Africa Iron, has already spent 2 billion rand ($192 million) on the project, part of a trend where South African mining companies are investing elsewhere in Africa.

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($1 = 10.4306 South African Rand)

(Additional reporting by Nomatter Ndebele; Editing by Mark Potter)

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