Chromium: Sibanye-Lonmin merger forms the largest UG2 producer

Precious metals miners Sibanye-Stillwater and Lonmin have approved a planned merger of the companies, effectively creating the world’s largest producer of platinum and the world’s second-largest producer of palladium. Sibanye-Stillwater said that 87% of its shareholders backed the all-share offer, which it revised down in April, valuing the smaller miner at US$286M.

Roskill View

The UG2 (Upper Group) has been mined for decades in the South African Bushveld Igneous Complex (BIC), mainly for the contained platinum group metal content of the ore body. Chromite has been mined, primarily, from richer chromitite horizons in the BIC, namely the LG (Lower Group) and MG (Middle Group) chromitite seams. As the platinum industry stagnated over the last decade, the utilisation of lower-grade chromite from UG2 ores has increased, which has helped to improve the balance sheet of platinum producers with chromium by-product credits. Roskill estimates that over 70% of the UG2 ores mined in 2019 will be processed to produce a chromite concentrate.

The merger of the two platinum-focused companies will also become the largest UG2 chromite producer. Implats and Anglo American Platinum are the other major miners of UG2 ores, although Implats has only more recently focused on improving chromite recoveries. Roskill estimates the joint UG2 chromite production of both Sibanye-Stillwater and Lonmin to have exceeded 2Mt in 2018, with potential to increase joint capacity to 3Mtpy.

Roskill’s Chromium: Global Industry, Markets & Outlook report will be published in June 2019. Click here to download the brochure and sample pages or to access further information.