Long March Capital mulls buying platinum assets in South Africa

Investment company considers buying platinum mines after strikes depress value

PUBLISHED : Saturday, 22 February, 2014, 1:15am
UPDATED : Saturday, 22 February, 2014, 1:15am

China's Long March Capital, a partner of Citic Group, is considering buying South African platinum assets after their value was depressed by strikes.

The company was reviewing a decision to hold off on buying such assets because of the labour issues, managing partner Clement Kwong said.

Long March last year teamed up with Citic unit Baiyin Non-Ferrous Metal and China-Africa Development Fund to complete their buyout of Perth-based Gold One International and indirectly bought a stake in South African-based Sibanye Gold.

"If the industry survives and makes a profit, then that would be a good signal to look at investing," said Kwong, who co-founded Long March in 2008. "This last round has repriced these assets down so I think it would be as cheap as it gets."

Anglo American Platinum, Impala Platinum and Lonmin say they have lost 4.4 billion rand (HK$3.08 billion) in revenue because of a four-week strike by about 70,000 workers.

We are scraping the bottom now. I don’t see how much worse the demands can be

The companies, which together produce about 75 per cent of the world's platinum, suffered losses from weeks of walkouts in 2012 and 34 protesting miners were killed by police at a Lonmin mine in August that year.

The platinum workers are demanding that monthly wages for the lowest-paid underground labourers be more than doubled to 12,500 rand a month. The miners' union rejected a pay increase offer of as much as 9 per cent. South Africa's annual inflation rate is 5.8 per cent.

"There is a current situation that has not been resolved," Kwong said of the industrial unrest. "But we think we are scraping the bottom now. I don't see how much worse the demands can be."

Long March advises and manages the group of investors, which in December last year completed their purchase of Gold One. The mining firm acquired a 17 per cent stake in Sibanye in August.

Kwong said Long March remained "very positive" on the "phenomenal number" of investment opportunities in South Africa, although it was wary of labour issues and discussion by the ruling African National Congress of additional taxes and nationalising the nation's mines.

The party in 2012 backed higher taxes for mines and rejected proposals to nationalise mines, an idea the party's youth wing had promoted for two years.

South Africa holds the world's biggest reserves of platinum and chrome.