Anglo American Platinum (Amplats) announced that Bokoni Platinum has agreed to sell its 100% owned mothballed Bokoni mine in South Africa to African Rainbow Minerals (ARM) for ZAR3.5bn ($221m) in cash.

The Bokoni platinum mine (BPM) is located in the Eastern Limb of the Bushveld Complex in the Limpopo province. Its holding company Bokoni Platinum is a 49:51 joint venture of Anglo American Platinum and Atlatsa Resources.

In 2017, the South African platinum mine was put on care and maintenance after several years of substantial cash losses driven by difficult market conditions.

About two years later, Anglo American Platinum and Atlatsa Resources had commissioned an independent technical study to assess options that would enable the restart of the mine.

The technical study considered options to position the Bokoni platinum mine with the required capital investment into a more sustainable operation.

After the conclusion of the study, the joint venture partners began a process to sell their interests in the South African mine to a buyer who will be in a position to provide the required capital for restarting its operations.

Anglo American Platinum CEO Natascha Viljoen said: “In conjunction with our joint venture partner, Atlatsa, it was important that Bokoni Mine was sold to an operator with the technical and operational capability and access to funding to ensure the restart and sustainable future for the mine.

“The restart of the mine by ARM is expected to benefit employees, host communities, broader stakeholders and the regional economy, and allow employees and communities to participate in a new ownership structure.”

ARM said that it will create a new subsidiary to acquire the platinum mine. Eventually, the subsidiary African Rainbow Minerals Platinum Proprietary will own 85% of the project.

A local community special purpose vehicle, an employee share ownership plan special purpose vehicle, and a black industrialists special purpose vehicle will each hold 5% in the project.

African Rainbow Minerals executive chairman Patrice Motsepe said: “The acquisition and development of BPM will enable us to scale our platinum group metals (PGM) portfolio, improve ARM’s global competitiveness and allow us to pursue further value accretive organic growth.

“In addition to delivering competitive returns for shareholders, the development of BPM will allow ARM to create sustainable value for a broad range of stakeholders including local communities, employees and black industrialists who will together own 15% of the mine.

“As we build and operate BPM, we will create approximately 5,000 jobs of which 2,500 will be permanent.”

The deal, which is subject to approvals from the relevant competition authorities and meeting of other conditions, is anticipated to be completed in 2022.

In conjunction with the deal, Anglo American Platinum has signed a purchase of concentrate agreement with ARM under which it will buy concentrate on commercially agreed terms from the Bokoni platinum mine.

The offtake deal is for a period of 23 years from delivery of the first concentrate, which is said to have been aligned with the presently agreed life-of-mine plan.