Glencore Xstrata prepares to sell 24.9% stake in platinum producer Lonmin
14 November 2013
Commodities and mining giant Glencore Xstrata Plc is preparing to sell its 24.9 per cent stake in platinum producer Lonmin Plc, CEO Ivan Glasenberg said yesterday.
With Lomin's current market cap of $1.98 billion, Glencore Xstrata's stake of 24.9 per cent would be valued at around $499 million.
"It's important that the platinum asset allows us to take advantage of the trading base," Glasenberg told shareholders at the company's investor day presentation. ''Platinum does not provide that trading advantage,'' he said.
Glencore Xstrata's platinum assets include a 24.9 per cent stake in Lonmin and a 74 per cent stake in Eland, a platinum producing asset in South Africa. Both the stakes were held by Xstrata prior to it being acquired by Glencore in May for $44.6 billion.
Platinum would be of limited strategic interest to Glencore Xstrata, since its core assets in South Africa are coal.
In 2008, London-based Lonmin had rejected an unsolicited $10-billion takeover offer by Anglo-Swiss mining group Xstrata, saying that the bid undervalued the company.
With plans to fund the acquisition from borrowings, Xstrata was forced to withdraw its hostile bid after the credit markets dried up due to the onset of the global recession.
In September, Glencore Xstrata, the largest shareholder in Lomin, increased its influence at Lonmin by having two senior executives appointed to the board of the South African platinum miner.
Glasenberg said that Glencore Xstrata was in "no rush to do anything" regarding its Lonmin stake. "We will review Lonmin as time goes on.
London Stock Exchange-listed Lomin is the world's third largest platinum producer with most of its operations located in the Bushveld Complex in the North West Province of South Africa, which holds nearly 80 per cent of global platinum resources.
It posted 2012 revenues of $1.6 billion.