Pine Pienaar, CEO, Mvelaphanda Resources
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Ridge exploring LionOre option
David McKay
Posted: Mon, 28 Aug 2006

[miningmx.com] -- A major constraint for newly established platinum companies is sourcing capacity for the smelting and refining of concentrate. That’s because the majors – Impala and Anglo Platinum, as well as Lonmin and Northam Platinum, tightly hold the highly specialised technology involved.

Impala Patinum was the first to discover that it could build additional income streams by opening up its refinery and smelters to service new entrants. Apart from making its operations more efficient by utilising capacities, Impala was able to build a relatively high margin business that it called Impala Refining Services.

Anglo Platinum is now also offering its refineries and smelters, but smaller companies are wondering how they could establish their own downstream treatment facilities.

Lonrho Africa CEO David Lenigas hopes to make inroads to a so-called independent smelter and refinery for PGMs. But the plan isn’t new. South Africa’s Trade & Industry Department, as well as the Industrial Development Corporation, has supported the notion for several years. It was given some impetus by black businessman Mzi Khumalo while he was a shareholder in Cluff Mining. But nothing has come of the matter.

Speaking in May, Ridge Mining CEO Terence Wilkinson says the company was investigating sending future concentrate from its Sheba’s Ridge project through an alternative process that doesn’t require smelting or refining. It’s patented by nickel producer LionOre and known as “Activox”. “There’s no doubt that an independent smelter is required, but Activox could be an alternative solution for Sheba’s Ridge,” says Wilkinson.

LionOre, however, says it hasn’t been in serious discussions about the proposal though it concedes having knowlege of some interest in its technology, most notably Albidon, a nickel explorer with prospects in Botswana.

Says Wilkinson: “We could wipe R1.65bn ($250m) off the capital cost of Sheba’s Ridge if we went with the LionOre option.”
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However, there are sceptics. “It’s one thing to establish a refinery and smelter in South Africa but how are you going to fill it?” asks Pine Pienaar, CEO of empowerment firm Mvelaphanda Resources. He believes that while there’s a need for an independent smelter it’s virtually impossible to find enough material to make fill an economically feasible sized facility.

A mini-rig at LionOre’s Activox pilot plant is being tested for its ability to treat PGMs. “By year-end we’ll make a decision to go the traditional smelting route or tying something up with LionOre,” Wilkinson says.