Light At The End Of The Tunnel For Platinum Industry?


BMI View: The sale of struggling platinum mines to restructuring specialists in South Africa could breathe life into the distressed platinum mining industry over the coming quarters. While our core view remains for the platinum sector to remain under pressure over the coming months, we anticipate a return of investor interest over the longer term.

We expect divestments and acquisitions to take place in South Africa's platinum sector over the coming quarters, which could gradually turn around the industry's faded fortunes. The five-month strike that took 40% of South African platinum production offline during H114 forced the afflicted mining companies to consider divesting of their assets. Following the strike, Anglo American announced it was putting some of its platinum mines up for sale and we expect further divestments across the industry (See 'Platinum Sector Divestments Ahead', June 26).

We expect willing buyers to be found for distressed platinum mines. Interest is likely to be shown by companies with restructuring expertise, companies with expertise in mining deep shafts and firms with a bullish outlook on platinum prices.

Bottom Line Pain For Platinum Producers
Select Companies - Net Income (USDmn)

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Related sectors of this article: Mining, Palladium - Mining, Platinum - Mining
Geography: South Africa