Hernic sold, well sort of…..

Mitsubishi has a buyer for Hernic, well short of. After South African authorities reportedly rejected to higher bids for Hernic from Chinese companies, the next highest bid came from Samancor Chrome. The South African authorities didn’t want Hernic to fall into the hands of a foreign company, sure.

The trouble is Samancor’s bid is conditional on finding financing. The most likely candidates are a Chinese company and Hanwa, which already helped Samancor in buying IFM. There were also questions on why Samancor would want to buy Hernic, especially since its owner, IMR, is negotiating to sell its stake in Samancor.

If that deal falls through Glencore is thought to be waiting in the wings to buy Hernic.

With a deal pending, it looks like Hernic won’t be closed at the end of March by Mitsubishi.

What happens after the sale is still unknown. Hernic is thought to have built sizable stocks since many buyers were hesitant to commit to a long-term deal without knowing if the plant would continue operating. Also with most  the 2018 supply contracts already booked, the question is where the Hernic material could go without disrupting the market.

Also is unknown is that is going to happen with Hernic’s massive debt and its deal with the BEEs, both of which are drags on any recovery.

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