More mines may offload local units - JPMorgan
Theme of restructuring of mining operations in SA‚ similar to that of Gold Fields’ unbundling of its domestic assets‚ is expected to continue this year‚ according to JPMorgan.
By Phakamisa Ndzamela‚
The theme of restructuring of mining operations in South Africa‚ similar to that of Gold Fields’ unbundling of its domestic assets‚ is expected to continue this year‚ according to global banking group JPMorgan.
"A lot of global mining groups are looking to rationalise their holdings and concentrate capital in their core operations. This process should lead to some activity in Africa and create opportunities for regional mining players‚" Brian Smith‚ the MD and head of investment banking in sub-Saharan Africa at JPMorgan‚ said in an interview on Friday.
Mr Smith said that even in the listed market there had been a distinct shift of ownership from foreigners to domestic institutions and this trend was likely to continue.
Gold Fields this year unbundled its Beatrix and the Kloof-Driefontein operations to a newly listed and local entity known as Sibanye Gold.
Although JPMorgan could not say which mining group would be next to sell‚ it has been reported that BHP Billiton is looking to unbundle some of its operations. It is believed that it may offload its Bayside Aluminium smelter.
Asked on the prospects of further listings on the JSE this year‚ Mr Smith said the initial public offerings market had been subdued for a number of years. But he was hopeful that with global investor appetite this trend could start to reverse in the year ahead.
In its annual results last week‚ the JSE said there were 12 listings last year compared with 16 in 2011.
On mergers and acquisitions‚ Mr Smith said there was an expectation of better deal flows than last year as risk appetite was improving.
Asked about the demand for credit by corporates‚ Marc Hussey‚ MD and head of global corporate banking for sub-Saharan Africa‚ said over the past 18 months JP Morgan had lent about $2bn in committed facilities. Some of it was not yet drawn down.
Year on year‚ he said‚ JPMorgan’s lending in South Africa had risen 112% compared with 2011.
In South Africa‚ the bank did not see itself as a competitor to local banks. Instead it formed partnerships.
"Our competitive advantage is to help clients on cross-border financing. JPMorgan follows global companies with business in South Africa and the rest of Africa‚" Mr Hussey said. "Our strength is in global capital markets."
JPMorgan’s sub-Saharan Africa headquarters are in Johannesburg and it is waiting for approval to open representative offices in Ghana and Kenya. It already has offices in Nigeria.