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 The mines account for over half of the company's workforce but only
a quarter of production and their viability was dealt a blow when
miners won pay increases of up to 20 percent. Amplats said it would
now focus on its more mechanized mines.
For the miners who faced hardship in their campaign for better pay,
a sale could increase the risk of future lay-offs.
The buyers are likely to be companies with an existing focus on
deep-level, labor-intensive mines, which may have more appetite than
Amplats for the challenge of making them commercially viable.
One of the biggest hurdles will be stiff opposition to any job cuts
from union leaders and politicians. Sensing potential conflict
ahead, South Africa's National Union of Mineworkers (NUM) condemned
the plan to sell the mines.
"Any sale is going to result in job losses and this is a punishment
for poor workers," its general secretary, Frans Baleni, told Reuters
on Monday.
Amplats said it would sell its Union mine, its operations at
Rustenburg and South African joint venture Pandora, calling them
"good long-life assets". Amplats' Rustenburg operations employ
around 20,000 people while Union has about 7,000, representing over
half of the company's head count.
Some analysts have said the five Rustenburg mines and the Union mine
could be worth between $1 billion and $2 billion, but others were
far more pessimistic.
Excluding the joint ventures Pandora and Bokoni, "we value the
combination at a negative $800 million, hence simply giving the
assets away would be deemed a result", said Nomura analysts in a
note.
Amplats Chief Executive Chris Griffith said a number of potential
suitors had expressed an interest.
"This is not a fire sale," he said, holding out the possibility that
the mines could be listed if they don't find a buyer.
He said the company had not been forced to sell because of the
strike, insisting it had been repositioning in favor of less
labor-intensive activities for some time.
But the stoppage has clearly forced its hand due to the heavy losses
in production and revenue.
STRUGGLING INDUSTRY
Amplats parent Anglo American had already signaled its intention to
reduce its troubled platinum portfolio. The sale suggests Anglo
American has little appetite for a long and costly campaign to make
the generally older South African platinum mines more efficient.
Anglo American is trying to achieve a return on capital employed (ROCE)
of at least 15 percent by 2016. In 2013 the figure was 11 percent,
with Amplats at only 2.7 percent.
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The platinum mining industry has been struggling in the face of
depressed prices for the precious metal, used for emissions-capping
catalytic converters in automobiles.
A buyer would inherit a three-year wage agreement with the hard-line
AMCU union.
But it would also secure annual platinum production of around
600,000 ounces, or a quarter of Amplats' capacity.
The apparent front-runner is Sibanye Gold, whose Chief Executive
Neal Froneman told Reuters this month he wanted a platinum deal
before the end of the year and could easily raise $1 billion to seal
one.
Sibanye was itself spun off from Gold Fields as a vehicle to manage
its labor-intensive South African operations so that Gold Fields
could focus on mechanized mining.
Sibanye also has Chinese investors, bringing it a cheap potential
source of funding.
Another Chinese-backed company, Wesizwe Platinum, has also said it
was looking at buying further assets in the sector.
Unveiling interim results, Amplats said it lost over 420,000 ounces
to the strike, which also affected rivals Impala Platinum and Lonmin..
Amplats said first-half headline earnings had dropped to 60 cents
per share, a fall of almost 90 percent which it had flagged in
advance.
Griffith said the company was shifting to more mechanized operations
and would "maintain growth plans" for the South African mines it
kept, which would enable it to produce around 2.9 million ounces of
platinum annually in 10 years' time.
"But we won't grow for the sake of growing. It will be market
driven," he said.
(Reporting by Ed Stoddard; additional reporting by Silvia Antonioli;
editing by Tom Pfeiffer)
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