Platinum group metals (PGMs) were the focus of Wednesday’s 2021 PGMs Industry Day online conference, but Sibanye-Stillwater CEO Neal Froneman made clear his more immediate expansion focus is on gold.

Conference host and moderator Bernard Swanepoel asked Froneman about mergers and acquisitions (M&As) in the platinum sector. Sibanye is a diversified precious metals producer which mines both gold and PGMs.

“Let’s rather talk consolidation,” Froneman replied. “Consolidation is absolutely necessary in terms of the bigger picture. It is really about making us relevant in terms of the international capital markets. At $13-billion market cap, we’re still not relevant. You really need to be a company with a market cap in excess of $20-billion to be relevant. And what relevant then means is that you attract better multiples, because you appeal to a broader shareholder/investor base.”

And on that note, Froneman said further expansion into PGMs was not an immediate option. Sibanye in recent years has acquired the PGM Stillwater operation in the US state of Montana, Anglo American Platinum’s labour-intensive operations and one of its mechanised assets, and swallowed Lonmin as it bled cash.

“In the PGM industry it would be difficult for us to see as Sibanye-Stillwater opportunities of M&A because of our relative size. We are very happy with our current position in PGMs, and in terms of looking for further external growth we are looking at battery metals and getting our gold portfolio back to something like 40% to 50% of our earnings because that creates sustainability, and I know that this is a PGM conference. But that creates sustainability for the payment of dividends.”

Sibanye’s gold assets currently account for 19% of its earnings, spokesman James Wellsted told Business Maverick. That is partly a reflection of price, especially the red-hot run that palladium and rhodium have had of late. The PGM basket price that Sibanye is currently fetching for its products is R62,000 per ounce, while gold is R25,600 per ounce. But in the current climate of ongoing global economic uncertainty, gold – which has a current spot price of around $1,730 an ounce – could make another run to $2,000.

Of course, additional gold assets would also boost bullion’s contribution to the Sibanye bottom line. 

Froneman told Business Day earlier this month that a mega-merger of South African gold producers could thwart them being takeover targets for the world’s top producers, Barrick Gold and Newmont. This has led to speculation that Sibanye, which began life in 2013 as a Gold Fields spin-off, is looking at a potential tie-up with the company that spawned it, or AngloGold Ashanti.

Froneman’s latest remarks show he is serious about this renewed focus on gold now that the PGM assets have been bedded down. A blunt talker with a reputation as a savvy deal-maker, Froneman clearly means business. This is a space to watch.

The 2021 PGMs Industry Day conference is part of the Joburg Indaba series organised by Resources 4 Africa. DM/BM