LONDON May 19 South African miner Northam
Platinum is searching for mines to buy but is
struggling to find high-quality, mechanised operations for sale
in South Africa, its chief executive said.
The mid-tier producer, which has been bolstered by a strong
balance sheet that is rare in the embattled industry, is seeking
rich, shallow ore bodies that would be cheap to mine.
"We would be very interested to acquire mechanisable large,
shallow, contiguous ore bodies but there are very few that are
out there that would meet those requirements," CEO Paul Dunne
told Reuters on the sidelines of Platinum Week in London.
Northam purchased Glencore's Eland mine in February
and mining land from Anglo American Platinum to extend
the life of its Zondereinde operation last year.
He said following its recent acquisitions, Northam would
focus on raising production at its mines.
"We have moved now from the historical single footprint ...
that in itself gives us quite a lot of breakfast to eat," Dunne
Northam is producing above its nameplate capacity at its
Zondereinde mine and plans to lift output at Booysendaal mine.
South African platinum producers are struggling with low
prices and soaring costs of electricity and labour, forcing
several of them to sell mines and lay off workers.
But none of the assets now on sale meet Northam's
requirements partly because many are labour-intensive and would
require a higher platinum price to be profitable, Dunne said.
Northam has a 2.2 billion rand ($163.3 million) war chest
after a 4.6 billion rand cash injection from a black ownership
deal inked in 2014 where the company issued shares and raised
its black ownership levels to more than a third.
South African miners are required to be 26 percent black
owned to help redress income inequalities created by apartheid.
Dunne said persistent tough market conditions persist for
South African miners would trigger more sales and acquisitions.
"We see clear opportunity for consolidation in this industry,"
Despite cost cuts, around 30 percent of global platinum
output - some three-quarters of which comes from South Africa -
is still losing money, GFMS analysts at Thomson Reuters say.
($1 = 13.4750 rand)
(Reporting by Zandi Shabalala; Editing by Edmund Blair)