• 7 hours U.S. Oil Production To Increase in November As Rig Count Falls
  • 9 hours Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 11 hours Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 12 hours EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 14 hours Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 15 hours Aramco Says No Plans To Shelve IPO
  • 3 days Trump Passes Iran Nuclear Deal Back to Congress
  • 3 days Texas Shutters More Coal-Fired Plants
  • 3 days Oil Trading Firm Expects Unprecedented U.S. Crude Exports
  • 4 days UK’s FCA Met With Aramco Prior To Proposing Listing Rule Change
  • 4 days Chevron Quits Australian Deepwater Oil Exploration
  • 4 days Europe Braces For End Of Iran Nuclear Deal
  • 4 days Renewable Energy Startup Powering Native American Protest Camp
  • 4 days Husky Energy Set To Restart Pipeline
  • 4 days Russia, Morocco Sign String Of Energy And Military Deals
  • 4 days Norway Looks To Cut Some Of Its Generous Tax Breaks For EVs
  • 4 days China Set To Continue Crude Oil Buying Spree, IEA Says
  • 4 days India Needs Help To Boost Oil Production
  • 5 days Shell Buys One Of Europe’s Largest EV Charging Networks
  • 5 days Oil Throwback: BP Is Bringing Back The Amoco Brand
  • 5 days Libyan Oil Output Covers 25% Of 2017 Budget Needs
  • 5 days District Judge Rules Dakota Access Can Continue Operating
  • 5 days Surprise Oil Inventory Build Shocks Markets
  • 5 days France’s Biggest Listed Bank To Stop Funding Shale, Oil Sands Projects
  • 5 days Syria’s Kurds Aim To Control Oil-Rich Areas
  • 6 days Chinese Teapots Create $5B JV To Compete With State Firms
  • 6 days Oil M&A Deals Set To Rise
  • 6 days South Sudan Tightens Oil Industry Security
  • 6 days Over 1 Million Bpd Remain Offline In Gulf Of Mexico
  • 6 days Turkmenistan To Spend $93-Billion On Oil And Gas Sector
  • 6 days Indian Hydrocarbon Projects Get $300 Billion Boost Over 10 Years
  • 6 days Record U.S. Crude Exports Squeeze North Sea Oil
  • 6 days Iraq Aims To Reopen Kirkuk-Turkey Oil Pipeline Bypassing Kurdistan
  • 6 days Supply Crunch To Lead To Oil Price Spike By 2020s, Expert Says
  • 7 days Saudi Arabia Ups November Oil Exports To 7-Million Bpd
  • 7 days Niger Delta State Looks To Break Free From Oil
  • 7 days Brazilian Conglomerate To Expand Into Renewables
  • 7 days Kurdish Independence Could Spark Civil War
  • 7 days Chevron, Total Waiting In The Wings As Shell Mulls Majnoon Exit
  • 7 days The Capital Of Coal Is Looking For Other Options

This Gold Miner Is Buying Something No One Expected

The preference for gold miners these days has been to sell assets. Just this week, major bullion producer Barrick Gold said it will likely sell six mines in the U.S. by year end -- in order to reduce debt.

That's why it was surprising in the utmost last week to see one gold miner making a big asset purchase. In a commodity that's not even gold -- in fact, not even a metal.

The firm is South African miner Sibanye Gold. A company that's recently been in the news after buying a slate of South African platinum mines from Anglo American. Related: The Clock Is Ticking On The U.S. Dollar As World’s Reserve Currency

And last Thursday, Sibanye said it is making another unexpected purchase. Buying part of a coal mining operation.

The company announced it will buy debt in South African coal developer Waterberg Coal Group -- in the form of an A$22.5 million convertible note. Sibanye will also invest A$8.5 million of working capital into Waterberg Coal.

Overall, the new agreement gives Sibanye the right to acquire up to a 51 percent ownership in Waterberg through additional investments over the 18 months following the close of the initial deal. Related: Russian Oil Industry Braces For Tax Hike

Which all begs the question: why? What is management seeing here that's causing them to spend, at a time when most gold miners are frantically trying to preserve cash?

In this instance, Sibanye is looking to the future. With the purchase aimed at securing coal supplies within its operating sphere -- which could help ensure access to steady electricity.

Sibanye said earlier this year that it wants to build its own dedicated power plant -- of between 200 and 600 MW capacity. A move that would insulate the company from high power costs in South Africa, as well as limited availability of power that's been hitting the mining sector of late.

Waterberg Coal Group holds a massive coal endowment in South Africa's northeastern Limpopo province. In total, the company has identified 3.4 billion tonnes of coal here. Related: Can The Saudi Economy Resist ‘Much Lower For Much Longer’?

Waterberg Coal however, has yet to begin mining, with the project being outside of South Africa's main coal-producing region of Mpumalanga. And the challenges of bringing on a frontier mine here pushed the company into bankruptcy earlier this year.

Sibanye is thus buying cheap into a big asset. Of the kind that could support its ambitions in power generation.

This is an out-of-the-box move, which could give Sibanye a big leg-up in South Africa's mining sector. Watch to see how this unique strategy pays off.

Here's to knowing what drives you,

Dave Forest

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment
  • Bob Johnson on September 22 2015 said:
    Barrick thought they were smart buying Cadence Energy and other Alberta assets in 2008 to hedge their oil costs.

    Unfortunately, it did not work out they way and they sold it all in 2013 for a huge loss.

    http://www.calgaryherald.com/business/barrick+gold+takes+500m+loss+energy+sale/8698388/story.html
  • Philip Branton on September 25 2015 said:
    They are not buying the COAL mine for the production of energy. They are buying it for the coming CARBON Nano-tube 3D manufacturing economy. Oilprice had better step up and educate OIL workers and COAL Mine workers about the use of COAL in 3D printing and manufacturing. Their Pension stocks are actually getting shorted due to a fake commodity "glut"..! These workers are going to be livid when they look at their home printer next to their computer and realize that it can now print products that they otherwise "buy"..! Heck, when they ask themselves how Donald Trump is gonna help create more jobs....their gonna ask themselves what Donald knows that they don't...! Imagine what all those Caterpillar workers are gonna think when they realize that COAL is gonna be used in personal 3D Carbon Nano-tube manufacturing. ...and then ask themselves why they are being laid off....? Uh...oh.....

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News