Implats acquires 24.5% stake in RBPlat

Shareholders in RBPlat are free to support our offer, sell their shares to us – or hold on to them: Johan Theron – group executive, corporate relations, Impala Platinum.

ROFHIWA MADZENA: Impala Platinum is taking another swing at buying a stake of Royal Bafokeng Platinum, and this just days after Northam Platinum finalised its 32.5% acquisition of the miner.

I’ve got Johan Theron, who is part of Impala Platinum, joining us to talk through the decision to again try to acquire shares in RBPlat. Thank you very much for your time, Johan. Maybe just give us a sense of why Impala Platinum delved into another try to buy those shares in RBPlat?

JOHAN THERON: I think it’s no secret that we’ve been trying for the better part of 20 years to do a transaction with RBPlat. On this last iteration we probably spent two years on due diligence and working up to this point. The original intention was to try and acquire 100%, and we were ready to make that offer. Regrettably that didn’t quite work out, with a competitor coming in and buying a major shareholder stake of 33%-odd.

Listen/read: Royal Bafokeng opts out of Implats buyout, signs deal with Northam Platinum

That left us again with a couple of issues to ponder on. We still see deep value in the benefits of the two assets working a little closer together, and we also became more confident that we could still unlock that value through making an offer to the minority and, in that way, acquire a position in the company – not 100% like we envisaged before, but certainly getting to 50% – where we can control and consolidate [it] into our own books. That would certainly allow us to unlock most of the value that we originally anticipated through the first transaction.

ROFHIWA MADZENA: It’s very interesting, this move, and you’ve mentioned a number of reasons that you are delving into it again. But initially the holding company of RBPlat, Royal Bafokeng Holdings, had indicated that they were not very interested in a deal with Impala Platinum, and would obviously vote against the deal. In your engagements with the stakeholders, has that view changed?

JOHAN THERON: No. I think one just needs to put that into perspective. Quite clearly our original transaction – having spent time on working up a value proposition – had a value proposition that was significantly lower than the R180/share offer that they [RBPlat] had got. So quite clearly they were incentivised by a competitor coming in and making a large premium offer. It would have been remiss of them not to think about the commercial rationale of getting maximum dollar for their stake. It certainly wasn’t something that we were contemplating offering, and they obviously maximised the commercial return.

I think the relationship and working together has never been in doubt, it’s just that they couldn’t support a lower offer when they had a much higher offer on the table.

ROFHIWA MADZENA: Then just explain how this exact acquisition is going to work. It’s a 24.5% stake in Royal Bafokeng Platinum. I was speaking to some market analysts earlier on today [saying] you are offering R115/share, whereas Northam had offered R180/share, which you’ve just mentioned. So how exactly is it going to work now with Northam Platinum being in the mix?

JOHAN THERON: I think there’s a couple of important things. The first thing is Northam only offered R180 to the Bafokeng as the major shareholder, nobody else; there was no other offer to the other minorities. Obviously that created a lot of unhappiness with the other shareholders. With our offer now to everybody – there’s a low probability that Northam will accept our offer – we anticipate that our offer is a compelling offer and that a large number of the minority stakeholders, shareholders, will accept that.

We’ve in fact already bought 25%-odd, so we’ve already effected and own 25%-odd. Obviously through this transaction now being open, we anticipate acquiring more with the momentum that we clearly have on our side.

I wouldn’t be surprised if very soon we will be over 30% and and approaching 40%.

Obviously shareholders in RBPlat are free to support our offer, sell their shares to us – or hold on to them. There is no other offer on the table as things stand today. Those are the two options they essentially have. The R180/share was never offered to them and so the two choices they have are to hold on to their equity or consider selling to us for the offer that we opened up today.

ROFHIWA MADZENA: Should they consider doing so, or actually do so, the process – how long are you thinking that it’s going to take because there are a lot of regulatory frameworks that need to be met in terms of finalising that acquisition? In terms of time frames the shareholders who are interested are probably thinking about when everything will be finalised. Is there a vague idea of that?

JOHAN THERON: With this particular offer we have to now complete and post the circular and this offer to the open market, which would open early in January. Typically these offers remain open for a month or two. But equally, because the offering is in the market, just like the institutional shareholders have already sold to us, other institutional shareholders or shareholders can certainly approach us and, on a bilateral arrangement, sell their shares to us at the offer price.

But as you alluded, I think with up to about 40% we’ve got a clear runway in front of us without too onerous regulations or hurdles to cross. Once we get to 40%, we would not be able to continue accepting the unconditional offers to buy. There the Competition Commission process first would have to play out, and that typically would take three months or so – or up to six months. So we certainly see a pathway where we can get to 40% quite quickly. Beyond that point, as you point out, it could take three to six months to finalise. But whoever comes with an offer, that would be the same for them, but they would start their process only when they make the offer. Our process would have run some distance by then.

ROFHIWA MADZENA: Of course, a competition process, Johan, is going to include conversations around … jobs. I’m sure Implats is willing to come to the table with an open mind to make sure that there’s minimal loss [of jobs], if any at all, after this transaction goes through – if it does.

JOHAN THERON: Absolutely. I think that’s perhaps one of the appealing parts of our offer. The combined entity employs 55 000 people. That’s a lot of jobs. In the whole Western Limb, we saw a lot of job losses during the last down-cycle.

What this offer does in our view is by tying up these two assets much more closely you unlock a lot of value and those 55 000 jobs become a lot more secure than they would be if the two companies were operating quite far apart.

So that certainly would be a positive for our proposal in my view.

ROFHIWA MADZENA: I’ve done a lot of reading around this and it’s very interesting to see, because a lot of market participants are saying that there would be better synergies between yourselves and RBPlat. Talk us through why people would think that. Of course it includes the fact that you would probably become one of the biggest platinum producers, above some of the other big miners that are currently operating. That is obviously a great thing – not only for the economy, but also for the business.

JOHAN THERON: Yeah. I think the way to think about it is these two operations are right next to each other, and are divided by a fence. If you think about it, there are two farms next to each other, and essentially by positioning the two companies closer to each other you are effectively removing that farm fence and allowing the two to operate almost as one, thereby having the benefit of scale of using each other’s infrastructure where it makes sense. That’s certainly true for us and becomes immediately available.

Northam, on the other hand, is some distance removed. Their closest mining operation is probably 120/150 kilometres away. So there are no obvious regional synergies where the infrastructure, the people and the resources can be brought to book like we would.

Covid-19 vaccinations

ROFHIWA MADZENA: One of the big talking points at the moment – and I can’t let you go without asking this – is vaccination drives. You’ve just spoken of an employee complement of over 50 000 people, and getting people vaccinated in the country at the moment is quite important. What is the Implats position here in terms of your vaccination drive and how you’ve been able to roll that out?

JOHAN THERON: We certainly see vaccinations as a key tool in terms of not just ourselves but the country and the world being able to combat Covid.

We were the first mining site to be licensed to administer vaccinations ourselves to our employees. We’ve also expanded that to use the same facilities for the surrounding community.

Within the group, I’m happy to report that our Canadian operation is already 100% vaccinated, our operation in Zimbabwe has already reached 100% in its own right, and the South African operations had a slightly delayed start compared to the rest of the world, but are way in front of South African statistics. We probably have a sort of 75%, 80% vaccination level, which is far superior to other industries and the country as a whole.

We’ve prioritised it and we’ve made it easy for our people to get vaccinated because we do believe that extending that opportunity to them and their families is the best way of guarding their health and wellness in terms of the challenges we all face with Covid.

Hydrogen economy

ROFHIWA MADZENA: And then finally, Johan, the opportunities for the future, the medium- to long-term future for platinum mining – we’ve had an amazing commodity super-cycle, but all those good things do come to an end. Just an overall view in terms of the sector, particularly PGMs? Are you optimistic about the demand globally for PGMs and the continued demand, even though after COP26 we are going to be seeing economies and governments move in different directions?

JOHAN THERON: Certainly we do, but there are also risks associated with that, as you rightly point out. The biggest risk for PGMs is certainly electrification in the auto sector. More battery cars being built certainly will have an impact on us.

But what we are also looking at supporting, and what’s developed as part of the longer-term answer to global warming, is hydrogen and a hydrogen economy. It is clear to us that that offers a lot of appealing processes forward and platinum in particular, as one of the PGMs in the range of PGMs that we mine, will play a key part in that. So while we still have good support, there is certainly a difficult road ahead of us with electrification eating into our markets. But, hopefully with continuous work and investment, we can also build the hydrogen economy to leverage a lot of that downside risk. Because of that, over the longer term, we remain very positive about PGMs, and specifically the role that platinum will play in the future.

ROFHIWA MADZENA: Brilliant. Thank you so much for your time. Johan Theron, the group executive for corporate affairs at Impala Platinum, also known as Implats….


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