This week marked the end of an era for Royal Bafokeng Platinum (RBPlat) as it delisted from the JSE after a 13-year run on the bourse, in what was described as a bittersweet moment for the Royal Bafokeng Nation (RBN).
The delisting came after Implats finally bought the business for R150 a share after a drawn-out battle with rival Northam. RBPlat has been renamed Impala Bafokeng.
RBPlat became South Africa's first community-owned entity to list on the JSE in 2010 and was regarded as an empowerment success story as it was majority owned by the Royal Bafokeng Nation (RBN) and managed by a team of locals led by former CEO Steve Phiri.
Phiri, who stepped down at the end of August, was replaced by Grant Magano, who was appointed executive lead for the new Implats subsidiary.
Obakeng Phetwe, who chairs both RBPlat and the Royal Bafokeng Nation Development Trust, said the delisting was a bittersweet moment for the RBN.
“It is bitter because we were the first and the only community-owned entity to be listed on the JSE up to now at the scale that I am talking about. I think we will miss just hearing financial commentary and news about the word RBPlat.
“It is sweet because RBPlat placed the RBN on the map. If we look at what we have been able to achieve as the Bafokeng, there has been value created by RBPlat not only in terms of the brand, but also the employment of over 5,000 people and enterprise development in the region.”
Owning 1,200km² of land in the Rustenburg local municipality with some of the world's richest platinum group metals (PGM) and chrome deposits, the Royal Bafokeng Nation led by Kgosi Leruo Molotlegi forms part of the Sotho-Tswana people, who migrated from central Africa and settled around the Pilanesberg mountain and Rustenburg along the western limb of the Bushveld Complex.
The Bafokeng have a rich history. After being dispossessed of their land, Kgosi August Mokgatle in the 1800s conceived a plan to buy back the land from the colonialists. He sent young men to work in the Kimberley diamond mines whose remittances enabled the nation to buy land. Owning the land placed the Royal Bafokeng Nation in a sweet spot when the world’s largest deposits of platinum group metals were discovered on their land in the early 1900s.
Phethwe said while the Bafokeng may be branded South Africa's wealthiest group, they are the most organised.
“Everything we own today starts from the land, just from owning the land and making something out of the land. Today we see a diverse portfolio. If we were not diversified, we would not have been able to do that. We ensure we are fit for purpose so when opportunities come, we can take advantage of those opportunities”.
The Royal Bafokeng Nation Development Trust and Royal Bafokeng Holdings (RBH) are responsible for diversifying the RBN's investment portfolio from a single asset portfolio. While the trust holds the RBN's assets and allocates funds towards social development and infrastructure, RBH is the nation's investment arm. The trust is RBH's sole shareholder.
The RBN diversified its portfolio from mainly mining into other sectors, including financial services, through investments in companies such as FirstRand, Outsurance and Discovery, as well as infrastructure and property. In 2022 the net asset value of its portfolio was R46bn.
Phethwe said the nation believes in a diversified portfolio.
We want future generations to find a diversified portfolio that can take them to another 100 to 200 years
— Obakeng Phetwe, chair of the Royal Bafokeng Nation Development Trust
“We want future generations to find a diversified portfolio that can take them to another 100 to 200 years. All of those are paying dividends as opposed to before when we used to get dividends from a single asset, which is in mining. We are getting dividends from a variety of assets. While in 2005 mining comprised 95% of the asset portfolio of the nation, today mining is about 15% and the rest is financial services, pharmaceuticals and telecommunication.”
When rival Northam Platinum abandoned its bid to acquire RBPlat in July, citing lower metal prices, it paved the way for RBPlat, with a 68MT PGM resource, to become part of Implats, ending one of the most a drawn-out takeover battles.
RBPlat, which operates the Bafokeng Rasimone Platinum Mine (BRPM) and Styldrift, has had a mixed performance. The company paid a maiden dividend in 2021. Before that, cash flow was used to pay off debt incurred in the R12bn Styldrift expansion. In the six months ended June revenue fell 29% compared to a year earlier on a lower basket price and lower production volumes.
Platinum group metal prices, which have slumped in recent months, had been driven in the past by demand from the auto industry to reduce emissions from the combustion engine.
Implats spokesperson Johan Theron said that under Implats, Impala Bafokeng has a better chance of withstanding the low commodity prices.
He said the whole industry is under significant pressure as a result of the lower prices.
“Large parts of the industry are now going to be loss making. We are back at a difficult time in terms of the price. While the transaction was ongoing, RBPlat fell behind for whatever reason. We are now next to them, holding their hand; now all the uncertainty is behind us.
“Where we have landed is the best outcome for everyone. It is a pity we had to go through a value destruction process. It was almost two years. It was long and drawn out. We could have ended up in the same spot in a much simpler and efficient way. The process was not good, but the outcome was the best possible outcome for all involved.”
He said the integration and delisting were immediate objectives.
“Getting the Styldrift project back on the front foot is critical. That business needs that new mine to operate at its design capacity and efficiencies. The processing of ore at RBPlat, where there are constraints with processing capacity and where the processing efficiency has lagged, is clearly a priority. Also being able to exploit some of the regional synergies where you are able to mine over the mine fence over the Impala side using local suppliers.”
The managing director at Sieberana Research, Rene Hochreiter, said the main legacy is that RBPlat was a mine that was not as successful as it could have been, often missing guidance and under-delivering.
“The main problem is that the ore body is not high quality. Further consolidation of the industry will not help profitability ... I am not in favour of consolidation. If a mine cannot be profitable, it must be shut down. The only people that make money out of consolidation are the advisers and we all know that 90% of all M&A deals fail.”
FNB Wealth and Investment equity analyst Makhosi Nyamela said the merger was a good deal for Implats.
“Implats needed to do this deal. For Implats it is not a nice to have, it is an essential. If you look at the shafts at the Implats Rustenburg lease area, a lot of the shafts are close to their end of life. Bringing in the two RBPlat mines is going to replace those shafts whose resources are coming to the end of their life.”
National Union of Mineworkers president Dan Baipile said the delisting of RBPlat was disappointing, but the union could do little to change the shareholders' minds.
“We were advocating for the Royal Bafokeng not to sell. It was the only mine in which the community of the Bafokeng had shares. The mine was profitable at the time of selling their shares. However, nothing is going to change for workers in as far as their employment is concerned.”
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