Jubilee Metals Group plans R16bn sale of chrome, PGM operations in South Africa

Jubilee Metals Group plans to dispose of its chrome and platinum group mining operations in South Africa - it is one of the five top chrome producers worldwide - for up to $90 million (R15.8 billion), so that it can focus on its copper business in Zambia.

This appears similar, albeit at a smaller scale, to the strategy being adopted by former South African mining goliath, Anglo American, which has already divested of its South African platinum and coal assets and will also soon sell its diamond assets, to focus on its new core assets: copper, premium iron ore, and crop nutrients.

Jubilee Metals, which owns and operates several chrome and PGM processing plants across the Western and Eastern Limbs of the Bushveld Complex in South Africa, said on Tuesday that the operations were being sold to One Chrome. A shareholder meeting was scheduled for August 28, where a resolution to approve the transaction will be voted on by shareholders.

Jubilee first announced its plan to sell its chrome and PGM operations on June 5, after it received an unsolicited offer from One Chrome, which is a private mining resources group with related companies operating in South Africa.

Jubilee owns and operates the Windsor chrome facilities and the Inyoni and OBB PGM processing facilities. It also operates three Thutse processing units in partnership with One Chrome. The three Thutse facilities make up a processing capacity of 130 000 tons per month of chrome ore.

Jubilee said in a letter to shareholders that its chrome and PGM operations had reached a pivotal point requiring the board to either continue as a processor of third-party ore with the likely prospect of reducing margins due to the rising costs to secure third-party chrome ore; pursue limited opportunities to acquire chrome mines to secure future ore supplies, or sell the chrome and PGM operations to redirect investment into a more favourable metals market such as copper.

In Zambia, Jubilee had said it had overcome several infrastructural challenges and power constraints. Through continued investment, its Roan concentrator had reached a point of stable production of copper metal from mainly third-party resources while it was developing the mining projects Munkoyo and Project G.

Demand for copper into the future is predicted to be very strong due to its uses in electrical equipment and vehicles, and in the data infrastructure industry.

Jubilee's directors said divesting in South Africa also removed “a considerable amount of jurisdictional risk.” South Africa’s real GDP growth decelerated from 1.9% in 2022 to 0.6% in 2023 due to electricity shortages, transport sector constraints, and lower international prices for gold and PGM.

They said the outlook for Zambia was more positive. According to the IMF, Zambia's real GDP growth was projected at 5.8%. Economic activity would be supported by a rebound in agricultural output, increased copper production, and a gradual recovery in electricity generation. The IMF expected economic growth of 6.4% in 2026.

Jubilee’s directors said that the resolution was in the best interests of the shareholders and recommended that they vote in favour of it, as they would with their own shareholdings.

Institutional shareholders, representing about 30.4% of the issued share capital of the company, had indicated they would vote in favour of the resolution.

The company said deals of this nature in the chrome and PGM industry, to acquire processing assets in the absence of large underlying resources, were “extremely limited,” with no material transactions recorded over the past five years.

“Zambia presents a highly attractive platform for growth underpinned by strong copper market dynamics, expanding resource potential, and meaningful economic upside,” they said.

The transaction would strategically reposition Jubilee within the copper sector, with significantly greater investor recognition and valuation multiples compared to chrome and PGMs.

Sale proceeds would substantially exceed Jubilee's short-term capital requirements for its copper business.

In addition, the transaction created the opportunity to implement a sustainable share buyback program or implement a dividend policy in the future. 

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