Northam in Talks to Quicken Buyout of Black Investors’ Stake

(Bloomberg) -- Northam Platinum Ltd. said it’s in talks to bring the buyback of shares from its Black empowerment partner to an early conclusion.

South Africa’s fourth-biggest platinum producer has already bought 70% of preference shares held by Zambezi Platinum RF Ltd. That reduces a potential liability in 2025 when the Black investors are permitted to divest; Northam would need to pay the difference if the shares fell below their initial acquisition price of 41 rand each. That potential liability has hindered the company from paying dividends.

“Northam has taken the initiative to enter into proactive discussions with Zambezi Platinum with a view to secure a successful and sustainable outcome,” Chief Executive Officer Paul Dunne said in a statement on Monday.

The company could maintain its Black shareholding levels through the deal, Northam said, without providing details. South African mining companies are compelled by law to be partially Black-owned in a bid to redress the economic inequities of apartheid.

Northam rose as much as 3.2% in Johannesburg on Tuesday, before trading at 163.07 rand.

If completed, the buyback deal could benefit Lazarus Zim, Sipho Mseleku and Brian Mosehla, the sole directors of three companies that own 55.4% of Zambezi. Zambezi held a 31.4% of Northam, a stake currently valued at about 25 billion rand ($1.5 billion), at the time of the initial arrangement in May 2015.

Black economic empowerment has been a key pillar of African National Congress policy since the party came to power in 1994.

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Mining empowerment laws, first enacted around 2004, have attracted criticism from opposition parties and labor unions as many deals have done little to narrow inequality in the country. They have accounted for the increase in wealth of a few Black businessmen including Patrice Motsepe, South Africa’s only Black dollar billionaire, and Cyril Ramaphosa, the country’s president.

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