Bloomberg News

Aquarius Falls to Three-Year Low: Johannesburg Mover

February 24, 2012

(Corrects to 39-month low in first paragraph.)

Feb. 24 (Bloomberg) -- Aquarius Platinum Ltd., the fourth- largest producer of the metal, fell to a 39-month low in Johannesburg as Zimbabwe rejected a joint proposal with Impala Platinum Holdings Ltd. to meet local ownership rules.

Aquarius declined 6.4 percent to 16.50 rand, the lowest close since Nov. 20, 2008. Impala, which has a smaller proportion of its assets in Zimbabwe, gained. They were told of the rejection in a letter from Indigenization Minister Saviour Kasukuwere dated Feb. 22, Impala said. The country is forcing foreign companies to cede or sell 51 percent of local assets to black Zimbabweans or government-approved agencies.

Impala, the world’s second-largest platinum producer, and Aquarius jointly own Zimbabwe’s Mimosa mine, producing about 100,000 ounces of platinum in concentrate a year. Impala produces about 15 percent of its metal in Zimbabwe while the country accounts for about 22 percent of Aquarius’s output.

“It’s a far larger percentage contributor in Aquarius than it is to Impala,” Mohil Bandulal, Sasfin Securities’ head trader, said by phone from Durban. “The concern is because Aquarius is a smaller business relative to Impala, it will be under more pressure if there is an indigenization.”

Impala gained 0.8 percent to 167.60 rand.

Impala, also known as Implats, and Aquarius will hold talks with the minister, the companies said in separate statements.

Cede Shareholding

“Implats is concerned to note the statement by the Minister that unless an agreement is reached with the National Indigenisation and Economic Empowerment Fund to transfer the required shareholding to NIEEF within 30 days, enforcement mechanisms will be activated,” Impala said in a statement.

Zimbabwe ordered Impala to cede its shareholding in Mimosa, the state-run Sunday Mail said Feb. 19, citing Kasukuwere. The state wants Aquarius to own 49 percent of the mine, with the rest held by black Zimbabweans, Kasukuwere told the newspaper.

“The Zimbabwe part of Implats has already been priced in by the market before this so there was no room for it to be priced in further,” Mia Kruger, a Johannesburg-based portfolio manager at Kruger International, said by phone.

Impala is already losing about 3,000 ounces of platinum a day after its Rustenburg operation in South Africa, the world’s largest platinum mine, halted output Jan. 30 on a pay dispute.

Plan Rejected

Impala also owns 87 percent of Zimplats Holdings, with an annual capacity of about 180,000 ounces of platinum at three underground mines. Zimbabwe rejected Zimplats’s proposal for local ownership last year. In a separate statement after the market closed, Impala said Zimplats had been advised by the country’s government that a portion of its revised plan to sell a stake to local citizens had been rejected.

South Africa and Zimbabwe hold more than three-quarters of global reserves of the metal.

More than 50 foreign-owned miners may lose their licenses because they haven’t submitted acceptable proposals, the Harare- based Herald newspaper said Sept. 8. Proposals by Nestle SA and Cargill Inc. were also rejected last year, it said.

“Enforcement or cancellation of mining rights has to be enacted by the Minister of Mines and Mining Development,” BMO Research said in a note today. “It is unclear what enforcement mechanisms the Ministry for Indigenisation can take.”

--Editors: Tony Barrett, Randall Hackley

To contact the reporters on this story: Carli Cooke in Johannesburg at clourens@bloomberg.net; Stephen Gunnion in Johannesburg at sgunnion@bloomberg.net

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


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