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Anybody wired into South Africa's platinum group metal (PGM) sector would have sighed at media reports over the weekend, to the effect that in an effort to deflect Xstrata's hostile big, Lonmin is in talks with Aquarius, a Tier II platinum digger, and diversified group Mvelaphanda Resources, which holds an effective 66% of Northam, also a Tier II  PGM name.

The reports are spot on, but also way wide of the far bigger game playing itself out. The bottom line is that what's going on now is going to eventually terminate in an end game that will determine the path of the PGM industry - where southern Africa accounts for three quarters of the world total - for the next fifty years.

Anglo Platinum, leader of the three Tier I names, alongside Impala Platinum and Lonmin, owns gigantic resources in the ground, and with its near-80% owner Anglo Platinum, is effectively out of the merger & acquisition (M&A) game. So too are Impala and Lonmin, with each other, that is, for competition reasons.

For its part, Xstrata has reasons beyond PGMs in bidding USD 10bn for Lonmin, of which expansion of Xstrata's chrome business is but one. Chrome, until recently regarded almost as irritating waste on southern African PGM mines, has come into sexy price ranges in recent years. Chrome is but one of a number of byproducts on PGM mines, along with gold, copper, and nickel.

Aquarius, one of the best run PGM outfits in South Africa, is attractive for its cash generating abilities, but is comparatively way short of ounces, with 17m PGM ounces left in its ground for mining. Impala owns a princely 187m, including its ground in Zimbabwe, and Lonmin a healthy 85m. Aquarius doesn't want to be left out of the party that's brewing.

The added attraction of being mixed in with one of the Tier I names is their ownership of smelters, and to some extent, refineries. Northam is the one exception on this score, as owner of a smelter. All other platinum miners are forced to have their concentrated PGM ore toll smelted by one of the four smelter owners, for which heavy fees are extracted.

The belle of this ball is, without question, Northam. Like Anooraq, Northam recently completed significant so-called black economic empowerment deals with Anglo Platinum. Northam's PGM resources ounces exploded to 129m, third-highest in the global PGM game. The reason for that, in turn, was the inclusion in Northam of more than 100m PGM ounces from Booysendal, the real belle of the ball.          

Northam, the toughest PGM mine in the world, is run by Glyn Lewis, one of the most gifted mining engineers of his generation, and arguably the world's top PGM digger. In a recent report, RBC Capital Markets, noting the recent major correction in PGM metal prices, remarked: "Most interesting is the fact that Anglo Platinum, Impala Platinum and Lonmin are currently producing at cost levels above that of Northam Platinum. Northam is the deepest operating platinum mine in the world and the only one of the four producers in South Africa that has to refrigerate the underground workings (requiring at least 25% to 30% more power)".

Day in and day out, Lewis and his team are able to bring ounces to profitable account and it is he who will be pioneering the build of Booysendal from virgin ground. If this were not enough, Booysendal will be mining at shallow depths for 30 years, where new PGM mines in South Africa are already classified as deep level.

While Lewis has latterly been associated with deep level mining, it was he who substantially built, from practically nothing, Tarkwa, in Ghana, for Gold Fields. Tarkwa today ranks as one of the largest, and most profitable, open pit gold mines in the world.

Given that Booysendal will be built from the ground up, it will be able to implement state-of-the-art techniques, technologies and practices. This would make it attractive to any mining name interested in the PGM area, not least BHP Billiton, the world's biggest diversified resources group.