ARM to invest in Zim platinum

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JOHANNESBURG — African Rainbow Minerals (ARM), the South African mining company controlled by billionaire Patrice Motsepe, says it will invest in Zimbabwe’s platinum sector.

Motsepe said his company will allocate resources in Zimbabwe.

“We are looking, and we will allocate” resources in South Africa and Zimbabwe,” Motsepe told investors on Monday in Johannesburg. “I think Zimbabwe will come around. It has to.”

The Zimbabwean government said Impala must transfer 29,5% of its Zimplats unit to a Zimbabwe government fund in order to meet local ownership requirements, a letter to the company from the indigenisation minister obtained by Bloomberg News shows.

African Rainbow has nobody “actively looking” at platinum in Zimbabwe, managing diretor Andre Wilkens said on the call. “We’re keeping our ears on the ground.”

ARM said it had appointed merchant banks to advise it on potential platinum deals.

“We hope to make the first announcement in the next two to three months,” Wilkens said.

The Johannesburg-based company would prefer assets close to its current operations it can control rather than buying stakes in listed companies, he said.

Motsepe was looking at platinum assets because “now is the best time” to invest in the metal, he said at a presentation earlier.

African Rainbow and Anglo American Platinum, or Amplats, own the Modikwa platinum mine and control the Two Rivers mine in partnership with Impala Platinum Ltd.

Both are in South Africa’s platinum-rich Bushveld Igneous complex.

Amplats and Impala, the two biggest miners of the metal, face rising labour and electricity costs in South Africa and demands for increased local ownership in Zimbabwe.

Anglo American Plc which owns about 77% of Amplats, had said February 17 it would review its platinum business, which was failing to generate acceptable returns.

Wilkens said there were “no formal discussions” with Amplats about possible asset purchases. African Rainbow would “see what becomes available” when Amplats decided to sell assets, he said on a conference call. African Rainbow has “a close relationship” with Amplats, which hasn’t indicated “exactly what they want to do”.

The metal, used in devices that cut car emissions and to make jewelry, declined 0,3% to $1 707,50 an ounce by 3:03pm in London, almost 26% below the 2008 record of $2 301,50.

African Rainbow slid 2,1% by the 5pm close in Johannesburg. The FTSE/JSE Africa All Share Index also closed 1,1% lower.

The mining company intends to increase production at its Modikwa venture to 500 000 platinum group metal ounces, expand iron ore output beyond 16 million metric tonnes a year and double manganese production to six million tonnes, it said.

African Rainbow has approved spending of R885 million ($116 million) to develop a new pit at the Beeshoek Iron Ore mine, which will extend output to July 2014.

African Rainbow produces iron ore and manganese in partnership with Assore Ltd.

“We are making substantial progress with our growth projects and are excited about the government’s stated commitment to allocate huge resources to upgrade rail, port and electricity infrastructure,” Motsepe said in a separate emailed statement.

“This will support and enhance our aggressive growth strategy.”

African Rainbow mines coal in partnership with Xtrata Plc and nickel with MCC Norilsk Nickel OJSC. It holds a 14,8% stake in Harmony Gold Mining Company.