Bloomberg News

Xstrata-Glencore ‘Highly Likely’ to Sell Lonmin, Liberum Says

February 05, 2012

Feb. 3 (Bloomberg) -- A combined Glencore International Plc and Xstrata Plc would probably sell their stake in Lonmin Plc, the third-largest platinum producer, helping spur deals in the platinum and ferrochrome industry, Liberum Capital Ltd. said.

“Platinum has no strategic interest for Glencore as marketing opportunities don’t really exist therefore a disposal is highly likely,” Ash Lazenby and Dominic O’Kane, analysts at Liberum Capital, wrote in a research note to clients.

Glencore, the world’s largest publicly traded commodities supplier, is in discussions to buy the shares in Xstrata that it doesn’t already own. Xstrata holds 24.6 percent of Lonmin, with a market value of about 540 million pounds ($855 million), according to data compiled by Bloomberg.

A disposal could be the catalyst for a “pooling of mutual platinum group metal interest,” bringing together assets from Xstrata-Glencore, Eurasian Natural Resources Corp., Northam Platinum Ltd. and Aquarius Platinum Plc, the analysts wrote. ENRC owns 13.5 percent of Northam.

Aquarius is the fourth-largest producer and Anglo American Platinum Ltd. and Impala Platinum Holdings Ltd. the largest.

The producers all tap the Bushveld geological complex in the north of South Africa, which has more than three-quarters of the world’s reserves of the metal.

Glencore sees limited value in precious metals and may seek to sell Xstrata’s Lonmin stake, UBS AG said in a separate note.

--Editors: Tony Barrett, Amanda Jordan

To contact the reporter on this story: Carli Lourens in Johannesburg at clourens@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net


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