Platinum Loses a Bit of Shine in Lonmin Acquisition

  • Sibanye-Stillwater is acquiring platinum miner Lonmin for $422 million
  • Platinum prices peaked at $2,308 per ounce in 2008

Sibanye-Stillwater (SBGL +/-&), South Africa’s largest gold producer, recently submitted a bid to acquire Lonmin (LNMIY +/-%), the world’s third largest platinum miner, for $422 million in an all-equity deal. Will the deal help Lonmin find its way in a market no longer enamored by platinum?

Why This Matters: The metal of choice for early 2000s hip-hop has had a rough decade. Peaking at $2,308 per ounce in 2008, platinum is currently trading at $956. Lonmin has struggled under falling demand for platinum down 7% year-over-year in 2017. The precious metal primarily used in diesel engines is losing its luster as gasoline and electric-powered engines take center stage.

The deal with Sibanye-Stillwater would buy the company more time to restructure, cut more than 12,000 jobs, and figure out a way to repay a billion dollars in debt. “The proposed transaction remains in the best interest of stakeholders and will create a leading mine-to-market producer of [platinum group metals] in South Africa,” said Lonmin CEO Ben Magara and Sibanye-Stillwater CEO Neal Froneman in a joint statement.

Situational Awareness: Sibanye-Stillwater is controlled by a Chinese consortium, yet secured approval to acquire Colorado-based Stillwater Mining Company for $2.2 billion in 2017. Look to see how the U.S. government treats Sibanye-Stillwater platinum imports as a sign of how serious the Trump administration is about protecting the U.S. economy from China.

CBx Vibe: “New Freezer” by Rich the Kid feat. Kendrick Lamar