LONDON, May 19 (Reuters) - South African miner Northam Platinum is searching for mines to buy but is struggling to find high-quality, mechanised operations for sale in South Africa, its chief executive said.
The mid-tier producer, which has been bolstered by a strong balance sheet that is rare in the embattled industry, is seeking rich, shallow ore bodies that would be cheap to mine.
“We would be very interested to acquire mechanisable large, shallow, contiguous ore bodies but there are very few that are out there that would meet those requirements,” CEO Paul Dunne told Reuters on the sidelines of Platinum Week in London.
Northam purchased Glencore’s Eland mine in February and mining land from Anglo American Platinum to extend the life of its Zondereinde operation last year.
He said following its recent acquisitions, Northam would focus on raising production at its mines.
“We have moved now from the historical single footprint ... that in itself gives us quite a lot of breakfast to eat,” Dunne said.
Northam is producing above its nameplate capacity at its Zondereinde mine and plans to lift output at Booysendaal mine.
South African platinum producers are struggling with low prices and soaring costs of electricity and labour, forcing several of them to sell mines and lay off workers.
But none of the assets now on sale meet Northam’s requirements partly because many are labour-intensive and would require a higher platinum price to be profitable, Dunne said.
Northam has a 2.2 billion rand ($163.3 million) war chest after a 4.6 billion rand cash injection from a black ownership deal inked in 2014 where the company issued shares and raised its black ownership levels to more than a third.
South African miners are required to be 26 percent black owned to help redress income inequalities created by apartheid.
Dunne said persistent tough market conditions persist for South African miners would trigger more sales and acquisitions. “We see clear opportunity for consolidation in this industry,” he said.
Despite cost cuts, around 30 percent of global platinum output - some three-quarters of which comes from South Africa - is still losing money, GFMS analysts at Thomson Reuters say.
$1 = 13.4750 rand Reporting by Zandi Shabalala; Editing by Edmund Blair