South Africa's Sibanye-Stillwater to be No. 2 platinum miner with Lonmin buy

Date Dec 15 2017 14:51:39 Source:Reuters

    LONDON/JOHANNESBURG, Dec 14 (Reuters) - South Africa's Sibanye-Stillwater  SGLJ.J  agreed to buy troubled miner Lonmin LMI.L   LONJ.J  for about 285 million pounds ($382 million) to create the world's No. 2 platinum producer in a bid to ride out depressed prices for the metal.

    Sibanye, whose CEO is called "Mr Fix It" for turning his firm from a spin-off with three old mines into a global precious metals player, said it would cut a third of Lonmin's employees and deliver savings of about $112 million a year by 2021.

    Lonmin, the world's third biggest platinum producer, has burned through $1.6 billion in cash which was raised from investors since platinum prices plunged 60 percent from their peak in 2008. But it has still struggled to fund its mines.

    Lonmin, with a century of history working in southern Africa, has lost 98 percent of its value since 2012, when 34 striking miners at its Marikana operation were killed by police.

    "This is a bailout deal for Lonmin," Nedbank precious metals analyst Leon Esterhuizen said. "It makes for a good match, but it doesn't resolve oversupply of the PGM (platinum group metals) industry."

    Lonmin's shares ended 20 percent higher on news of the deal, while Sibanye-Stillwater, which will also become the world's second biggest palladium producer, closed down 7 percent in Johannesburg.

    Platinum  XPT=  has tumbled in value because of bloated supply and falling demand from the automotive industry, where the metal is used in technology to cut vehicle emissions.

    "The flexibility inherent in the larger regional PGM footprint will create a more robust business, better able to withstand volatile PGM prices and exchange rates," Sibanye Chief Executive Neal Froneman said in a statement.

    Sibanye outlined plans to cut 12,600 of Lonmin's 33,000 jobs over three years, with a further 890 positions at risk, helping yield annual savings of 1.5 billion rand ($112 million) by 2021. A presentation on its plans said the measures aimed to cope with platinum prices that were "lower for longer".

    "Doubtless welcome news to long suffering Lonmin shareholders averting the need to dig into their pockets once again to refinance the company in its regular three to four year refinancing cycle," said Marc Elliott, analyst at Investec bank.

    He said Sibanye management could get the most value from Lonmin's smelting and refining assets and could also be betting on a rebound in the price of platinum group metals.


    Froneman also cut jobs and costs after Sibanye was spun off from Gold Fields  GFIJ.J  in 2013, a task that is particularly fraught in South Africa where unemployment runs at 27 percent.

    South African Mining Minister Mosebenzi Zwane said in a statement that "the creation and retention of jobs in this sector is a critical part" of ensuring stability.

    Lonmin's main labour union, AMCU, said it would consider mass action to oppose the Sibanye and Lonmin deal. AMCU led a record five-month strike at Lonmin and its peers in 2014.

    Under its bid, Sibanye will offer 0.967 new Sibanye-Stillwater shares for each Lonmin share, giving Lonmin shareholders about 11.3 percent of the enlarged group. 

    Under the deal, Lonmin would put all of its older mines on care and maintenance, which means operations stop but they are kept in a condition to resume in future.

    "While in some way I am sad, I am sure as hell that this is the right thing for the sustainability of the company," Lonmin CEO Ben Magara told Reuters.

    Sibanye and Lonmin have been talking for months, sources said, after Sibanye looked at Lonmin a few years ago before turning to another deal. One banking source told Reuters the rest of Lonmin's portfolio would be reviewed over time.

    Lonmin, listed in London since 1961, has been undergoing an operational review to help resolve a cash crunch that led its banks to relax some debt covenants. The miner has tapped shareholders for cash three times since 2009.

    Lonmin emerged in the 1990s after the split up of Lonrho, a conglomerate run for three decades by buccaneering tycoon Tiny Rowland, whose firm was branded in the 1970s by Britain's prime minister at the time as the "unacceptable face of capitalism".

    Sibanye made its first foray into platinum by buying Anglo American Platinum's  AMSJ.J  Rustenburg operations in 2015, and then bought Aquarius Platinum and U.S. palladium producer Stillwater.

    Froneman told Reuters he had no plans for another major acquisition. "There may be smaller assets that fit into that, but for now we are done in terms of our PGM profile."

    State-owned Public Investment Corporation (PIC), which owns 30 percent of Lonmin, increased its stake in Sibanye in November to 11 percent. It is now the top shareholder in both firms.

    PIC was not immediately available to comment on the deal.

    In November, Reuters reported on its array of measures to save cash after it delayed its annual financial results pending conclusion of a business review.  

    UBS and HSBC  HSBA.L  advised Sibanye on the deal.

    Lonmin shareholders Schroders and Majedie declined to comment.


    ($1 = 13.4361 rand) 

Edited by SHMET

UK lawmakers say watchdog too slow on steelworker pensions

Date Dec 14 2017 17:06:51 Source:Reuters

    LONDON, Dec 13 (Reuters) - Britain's markets watchdog was accused on Wednesday of being an "archangel with feet of clay" for not dealing faster with concerns that steelworkers are being "ripped off" over their pensions, lawmakers said on Wednesday.

    Steelworkers in South Wales and northern England must decide what to do about their 15 billion pound ($20 billion) British Steel pension pot. They face a multitude of advisors and "introducers" touting for business, some offering a free meal to win business.

    The steelworkers must transfer to a new scheme or join a pensions lifeboat, the Pension Protection Fund, following the closure of their current pension scheme.

    "What have you been doing to actually get hold of the crooks?" Frank Field, chair of parliament's Work and Pensions Committee, asked Megan Butler, executive director of supervision at the Financial Conduct Authority (FCA).

    Was the FCA "knocking on doors" to catch the "cowboys" and end the "horrors going on in the streets"? Field added.

    Butler said four financial advisors have stopped offering advice after the FCA intervened, with visits being made by a team of eight supervisors to several more. It held four seminars with advisory firms, and is holding public meetings this week.

    "We can and do act," Butler said. 

    Over 12,000 steelworkers have asked advisers for a transfer quote, with 2,200 transfers made or in progress from an eligible pool of 38,000 pension members.

    The aim is to "cauterise" immediate harm ahead of "phase two" when compensation may be paid to people given bad advice, Butler said.

    "It sounds like a gentle tap on the wrist to me," a committee member said.



    Some transfers involve sums up to a million pounds, meaning big fees for advisers, and Butler said there was evidence of a "high level of confusion" about transfer choices.

    Field criticised Butler for not remembering off hand the names of the four advisory firms that can no longer advise the steelworkers.

    "There is something desperately wrong at the centre of the FCA that it operates like this," Field said.

    With the help of aides at the meeting, Butler named three of the four firms: Active Wealth (UK), Pembrokeshire Mortgage Centre, and Mansion Park. The fourth would not be named for the time being.

    Lawmakers criticised Active Wealth (UK) and Celtic Wealth

Management for not turning up to the hearing. Both had no

immediate comment.

    Pembrokeshire Mortgage Centre said it could not comment in detail due to ongoing FCA inquiries, but expected it will be shown that it acted properly and correctly at all times.

    Mansion Park confirmed it was visited by the FCA and voluntarily stepped back from dealing with the steelworkers until it has received written feedback from the watchdog.

    "Early indications are that some of our implementation processes may need to be reviewed and strengthened," Mansion Park said.

    Unconnected to the FCA's investigations, St James's Place SJP.L , one of Britain's biggest financial advisers, said it would no longer accept new transfer requests from the steelworkers, but would complete those in the pipeline.

    Lawmaker Stephen Kinnock, who represents some of the steelworkers, said separately that he will meet with FCA Chief Executive Andrew Bailey next week.

    "I am increasingly concerned about the stories of unscrupulous advisers targeting the steelworkers and cheating them out of their pension money," Kinnock said in a statement.

    ($1 = 0.7501 pounds)


Edited by SHMET

China steel prices sag further on slow demand, coke down 4 pct

Date Dec 14 2017 17:06:13 Source:Reuters

     MANILA, Dec 14 (Reuters) - China's steel futures fell nearly 2 percent on Thursday as demand in the world's top consumer slows over winter along with construction activity, although multi-year low stockpiles capped losses.

    Prices fell even as fresh data showed China's steel output declined to a nine-month low in November because of state-ordered production curbs aimed at limiting pollution.

Steelmaking raw materials coking coal and coke slid about 4 percent.

    Given freezing weather, "construction activities may gradually slow further in the northern part of China, so there's less demand for construction steel," said Richard Lu, analyst at CRU consultancy in Beijing.

    Some property developers may also be slowing purchases as they pay back loans with the year-end approaching, he said. 

    The most-active rebar contract for May delivery on the Shanghai Futures Exchange  SRBcv1  closed down 1.6 percent at 3,786 yuan ($573) a tonne, adding to Wednesday's 2.4-percent slide.

    The construction steel product, up almost 10 percent in November, hit a three-month high last week as China's output curbs thinned stockpiles to the lowest in years.

    Inventory of rebar at Chinese traders stood at 2.85 million tonnes on Dec. 8, the lowest since at least December, 2011, according to SteelHome consultancy.  SH-TOT-RBARINV 

    China's average daily crude steel output fell to 2.205 million tonnes in November from 2.334 million tonnes in October, based on government data released on Thursday. It was the lowest level since February. 

    But some end-users are reluctant to buy more steel, said CRU's Lu. "Buyers were hesitant to place orders because they said prices are currently too high for them," he said.

    Coking coal on the Dalian Commodity Exchange  DJMcv1  fell 3.8 percent to 1,236.50 yuan a tonne and coke  DCJcv1 , which is processed from coking coal, dropped 4.2 percent to 1,998 yuan.

    After recent sharp gains, coke prices "need to slow down a little", said Cao Ying, analyst at SDIC Essence Futures.

    "But prices of both coke and steel will stay high during the winter," she said, with both commodities covered by Beijing's production curbs. China's coke output fell 10.9 percent in November to 34.47 million tonnes. 

    Iron ore DCIOcv1 slipped 0.6 percent to 498 yuan a tonne, while Iron ore for delivery to China's Qingdao port  .IO62-CNO=MB  slid 1 percent to $70.54 a tonne on Wednesday, according to Metal Bulletin, below a three-month high of $72.68 reached on Dec. 4.

    "We think China's iron ore market remains saturated with both domestic and import sources. Therefore, iron ore prices should continue to be under pressure," Argonaut Securities

analyst Helen Lau said in a note.      

($1 = 6.6100 Chinese yuan) 

Edited by SHMET

METALS- London metals mixed, China data supports

Date Dec 14 2017 17:05:33 Source:Reuters

    MELBOURNE, Dec 14 (Reuters) - London metals turned mixed late in Asia on Thursday as a China rate rise took the shine off cheerier manufacturing reports from the country and Japan, with markets winding down ahead of the Christmas break.         

    China's central bank on Thursday nudged up money market rates as authorities sought to defuse financial risks without imperilling the economy, a balancing act that it has managed successfully so far this year as activity remained broadly steady.

    The move came after the U.S. raised rates and after a number of improving manufacturing readings out of China and Japan. 

    "It all continues to paint a relatively positive picture -- at least not as bearish as the market is concerned about," said analyst Daniel Hynes of ANZ in Sydney.

    "Coming into year-end, there has definitely been a bit of profit-taking and no-one's really willing to put fresh longs on the table at the minute."



    * COPPER: London Metal Exchange copper CMCU3 cut gains, easing slightly to $6,720 a tonne by 0808 GMT, after gaining 1 percent in the previous session. It earlier hit the highest since Dec. 5 at $6,765 a tonne. Copper's chart picture has improved, having closed above the 100-day moving average at $6,690 which is now support. 

    * SHFE: Shanghai Futures Exchange copper SCFcv1 cut gains to 0.2 percent at 52,290 yuan ($7,910) a tonne.

    * NICKEL: LME nickel CMNI3 erased a near 2 percent gain, while zinc was flat, and lead slipped 0.6 percent paring back recent strength.

    * CHINA ECONOMY: China's fixed-asset investment growth slowed to 7.2 percent in the January-November period, while industrial output expanded at a faster pace than marketshad expected.

    * USD: The dollar fell after the Fed did not raise its rate hike projections to four next year, despite signals of healthy economic growth, and instead flagged inflation concerns.  USD/ 

    * ALUMINIUM: China's primary aluminium production fell for a fifth consecutive month in November, official data showed on Thursday, as the country's winter restrictions on smelters pushed output to its lowest since February 2015.

    * JAPAN MANUFACTURING: Japanese manufacturing activity expanded at the fastest pace in almost four years in December.

    * TIN: Shfe tin  SSNcv1  fell by 0.7 percent extending this week's fall to nearly 4 percent, as open interest has surged towards 30,000 lots, a record high, suggesting a large short position has been opened. 



    * Asian stocks edged higher on Thursday after the Federal Reserve delivered a much-anticipated interest rate hike but flagged caution about inflation, tempering expectations for future tightening, which weighed on the dollar and Treasury yields.  MKTS/GLOB     





Edited by SHMET

China daily steel output falls to 9-month low on pollution curbs

Date Dec 14 2017 17:04:54 Source:Reuters

    MANILA, Dec 14 (Reuters) - China's daily crude steel output slid in November to the lowest in nine months, government data showed on Thursday, as state-imposed curbs aimed at battling smog slowed production at mills in the northern part of the country.

    Daily average steel output dropped to 2.205 million tonnes in November from 2.334 million tonnes in October, according to Reuters' calculations based on data from the National Bureau of Statistics.

    Overall output fell 8.6 percent to 66.15 million tonnes in November from October, but was up 2.2 percent from a year ago, according to the data.

    The daily average and monthly output was the lowest since February.

    Year-to-date production rose 5.7 percent to 764.8 million tonnes from a year earlier, putting China on track for record output this year.

    China ordered steel mills and coke plants in 28 cities to cut production between Nov. 15 and March 15 to help clear the country's smoggy skies. 

    The move has reduced steel supply at a time when demand from southern regions was firm, helping lift steel prices SRBcv1  by nearly 10 percent last month.

    Steel production is expected to decline further in December due to ongoing output curbs and seasonal weakness in demand. 

    China's steel output is expected to rise 3 percent to 832 million tonnes this year, and by a further 0.7 percent to 838 million tonnes in 2018, the China Metallurgical Industry Planning and Research Institute said this month.

Edited by SHMET