UK listed platinum miner Lonmin (LON), which is looking at the possibility of diversifying out of platinum, is most likely to go into commodities that China is demanding, analysts say.
China’s gross domestic product is growing at more than 8% per annum and is the fastest growing of the world’s largest economies.
The country is having a significant impact on the price of many of the
world’s metal and bulk commodities. China is currently importing large quantities of iron ore to make steel as well as stainless steel and alumina or aluminum oxide to make aluminum.
Large quantities of ferro-chrome alloy, manganese and nickel, all used in steel and stainless production, are also being imported.
South Africa currently accounts for about 70% of the world’s annual ferro-
chrome alloy supply.
Demand for platinum in China is also strong with the country having accounted for 23% or 1,47-million ounces of total global platinum demand of 6,370-million oz in 2002, according to Johnson Matthey.
“Lonmin should be long on what China is short of. The company shouldn’t go into competition with China but should instead feed the country’s demand,” an analyst said.
Former BHP Billiton (BIL) chief executive Brian Gilbertson is likely to have been primarily hired to aid Lonmin’s diversification and to help it with mergers and acquisitions.
“Gilbertson can give very good advice due to his experience at BHP Billiton. Lonmin wouldn’t be able to get the same advice from a mainstream management consultancy,” he added.
However, given Gilbertson’s nature he is more likely to want to run things at Lonmin than act as a consultant, an analyst said. There is speculation that Gilbertson could take an executive position at Lonmin, in the future, once he has reached a financial settlement from BHP Billiton for his early departure in January 2003.
At present, Gilbertson has a two-year consultant contract with Lonmin, which is renewable for a third year. – I-Net Bridge