Commission’s green light takes Glencore further down the road to platinum exit
Competition regulator recommends the sale of its stake in the Mototolo mine and chrome plant to Amplats
Global commodity trade Glencore's exit from platinum came a step closer on Tuesday when the Competition Commission recommended the sale of its stake in the Mototolo mine and chrome plant to partner Anglo American Platinum (Amplats).
Glencore has already sold its 24.9% stake in Lonmin and its Eland platinum mine to Northam Platinum. Mototolo was the last asset held by Glencore that related to platinum. CEO Ivan Glasenberg has made it clear in the past that the bulk commodities trader had no interest in platinum group metals.
Glencore, which is a miner and trader of bulk commodities, said in July that it had agreed the sale of its 39% stake in Mototolo mine to the world's biggest platinum producer for an upfront payment of R800m and six monthly cash payments, giving the transaction a net present cost of R1.5bn.
The commission recommended that the Competition Tribunal, the final arbiter of transactions, approve the deal, which includes the sale by Glencore of its stakes in the Mototolo mine near Burgersfort, Limpopo, and the Mototolo Chrome Recovery Circuit without any conditions. Glencore sells its share of metal production, which is concentrated by Amplats, to the platinum miner in a joint venture agreement set up in 2005.
"The commission found that the proposed transaction is unlikely to result in a substantial prevention and lessening of competition," it said on Tuesday.
"The commission further found that the proposed transaction is unlikely to raise employment concerns. In addition, the proposed transaction does not raise any other public interest concerns."
The key strategy behind the Amplats purchase of the stake in Mototolo is not just getting a firmer grip on the mine but the infrastructure at the mining complex that unlocks the nearby undeveloped Der Brochen property owned by Amplats.
"The acquisition of Glencore's stake in the Mototolo joint venture increases Anglo American Platinum's interest in a mechanised, low-cost, high-quality resource, creating another major platinum group metals hub for the company, "Amplats CEO Chris Griffith has said. "The transaction unlocks significant optionality for the company in its wholly owned Der Brochen resource."
He said it would extend Mototolo's life six-fold to 30 years. Mototolo is one of the highest-margin, safest mines in the Amplats stable, with a profit margin of 43% and output of 130,000oz of platinum a year.