EDITORIAL: Sibanye takes a big bet

No-one could conceivably claim that Sibanye Gold’s CEO, Neal Froneman, isn’t an ambitious man. Last week, Sibanye announced a R30bn takeover of American platinum miner, Stillwater Mining — before it beds down any of its new platinum acquisitions, and just a month after it took control of Rustenburg Platinum Mines.

For Froneman, the deal is a masterstroke on two counts. First, platinum prices have rebounded to US$930/oz from their recession-induced depression of $825/oz eight years ago. Secondly, the deal would provide Sibanye with a much-needed geographic diversification.

Still, the risks of investing in the US are much larger too. Ask any number of companies which have battled to do so — including Discovery and life assurer Sage.

In Stillwater, Sibanye is swallowing a company bigger than itself. It now risks juggling a daunting new venture in unknown territories. Froneman is also on the record as saying he is still on the prowl for coal assets. That’s a lot of balls to keep in the air.

It is certainly admirable that Sibanye sees value in the current mining environment — but history is littered with the carcasses of ambitious companies and the careers of executives that spread themselves too thin away from their core competences. Fingers crossed Froneman has taken all this into account.