China to take over SA miner in $877-million dollar deal

China is set to invest $877-million to take control of a small South African mining company and to build a new platinum mine in the country, a spokesperson said on Wednesday.

A term sheet for the deal was signed on Friday and if it goes through it would be China’s second-largest investment in South Africa, after it ploughed $5,5-billion into Standard Bank nearly three years ago.

China is the number one investor in Africa and last year became South Africa’s biggest trade partner.

The latest agreement follows a string of major Chinese investments across the continent this month, including a $23-billion deal oil refinery deal in Nigeria and concrete plants in South Africa and Mozambique.

Under the arrangement, China’s state-owned nickel miner Jinchuan would take a 51% in junior South African miner Wesizwe for about $227-million, Wesizwe spokesperson Julian Gwillim told AFP.

The China-Africa Development Fund would then raise about $650-million to build a new platinum near Rustenburg, he said.

“It was a very compelling offer for the shareholders,” he said.

“If the transaction goes, through, the Chinese will be the largest shareholder at 51%,” he added.

Wesizwe has been listed on the Johannesburg Stock Exchange since 2005 and has already completed a feasibility study on the mine, he added.

The main demand for platinum has come from the auto industry, which uses the precious metal to make catalytic converters that reduce pollutants from vehicles’ exhaust fumes.

But last year, Chinese demand for platinum jewellery soared to a record annual high as consumers were attracted by lower prices in the wake of the global recession, according to a report by leading metals group Johnson Matthey.—AFP

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