Sibanye-Stillwater, Lonmin, Platinum & What Gives?

Shareholders of both companies have voted overwhelmingly to support Sibanye's acquisition of Lonmin, creating the world's largest (or #2 depending on whose counting) platinum producer, effective June 7, 2019. 

My read? Sibanye-Stillwater (SBGL) is trading way below 3 billion US dollars; to cheap for a company with such a remarkable asset portfolio and sophisticated leadership. So, I don't relate to these SBGL prices in the 3's, other than as opportunity.

Well, I also don't relate to platinum trading under $800. I don't get it. China is now making noise about controlling the rare earth market, yet the platinum group metals are equally if not more critical, and certainly far more rare, with a geographic distribution that, to me, raises strategic concerns. Russia and South Africa are really large and in charge here. Russia, with 70% of the world's palladium and plenty of platinum and other PGMs, under the focused leadership of Putin, is in a position to use PGMs strategically. While South Africa is a democracy, its range of problems that I have catalogued create far less certain a source of supply than a US strategic planner would like. Russia is truly in the catbird seat.

I would think investors would understand this, along with the incredibly tiny PGM markets that have no room for any strategic manipulation or increase in investor demand leaving military and civilian uses, for which there are no substitutes, scrambling for supply at higher and higher prices. 

I would also think that both China and the United States would come to their senses and recognize their exposure in the platinum group metal market. Not sure how that translates into action, given the limited geographic dispersion of the PGMs, but something will unfold. 

One day, this will be understood.

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