Implats signs regal BEE deal

Impala Platinum Holdings (IMPUY-O), the world’s second-largest platinum producer, has agreed to sell a 49% stake in its refining business to Royal Bafokeng Resources Holdings for 3.4 billion rand.

RBR can convert the stake in Impala Refining Services into a 7.44% interest in Implats over 10 years. Combined with its existing 1.35% stake, RBR would hold about 9% of Implats, on a fully diluted basis.

“This transaction further cements the long-standing relationship between the RBR and Implats,” said Implats CEO Keith Rumble in a prepared statement. “RBR will have direct management involvement in Impala Platinum, focusing particularly on skills transfer and employment equity.”

Also under the proposed deal, Implats will set up a 340 million rand trust to aid economic development of the Bojanala district, including the towns of Rustenberg, Brits, Koster and Moretele. At least half the money would be controlled by women, which comprise 52% of the RBN.

Implats has also agreed to a separate deal to lend around 1.8 billion rand to an employee share ownership trust to acquire 2.05 million shares, good for a 3% equity stake in the company. Implats says the trust represents “a broad base of staff employed by Implats’ South African subsidiaries.”

The proposed transactions are aimed at satisfying South African Mining Charter requirements that companies must be 15% owned by historically disadvantaged South Africans by 2009, and 26% owned by 2014.

Implats says the latest deal combined with a previous black economic empowerment (BEE) transaction should satisfy the requirements, with HDSA ownership of Implats exceeding 26% in 2006. The transactions still require regulatory approval.

In September of 2004, Implats sold its 27.1% stake in Lonmin’s operating subsidiaries, Western Platinum and Eastern Platinum (Lonplats) to Lonmin and black-empowerment group Incwala Resources for US$800 million. Lonmin is the world’s third-largest platinum producer.

RBR is held privately by the Royal Bafokeng Nation, a tribal group representing some 300,000 Tswana people in South Africa’s Bushveld region. The RMN owns some 2,000 sq. km worth of land in the North West province. The fabled Merensky and UG platinum group element reefs underlie the area.

Bafokeng King Leruo Molotlegi, the 36th monarch of the 800-year-old dynasty, said the deal was a watershed for his nation. “It consolidates our interests in quality mining assets and extends our sphere of influence over the mining activities taking place on our doorstep.”

RBN was formed in 2002 to hold a royalty interest and minority shareholding in Impala. The 22% royalty is part of the settlement in 1998 of a decade-long dispute over the rights to mine reserves on Bafokeng land near Rustenburg. That deal also saw RBN pick up its original 1.35% stake in Implats.

The RMN uses the royalty funds for medical infrastructure and social and educational services for the Bafokeng community.