Miningmx » Special Reports » Mining Yearbook

Upending the platinum cart

Allan Seccombe | Tue, 30 Sep 2008 15:39
[miningmx.com] -- IN A FAIRLY small but high-roofed room is a smelter that could be the future of South Africa’s platinum industry. The gestation period of the technology is just about at an end.

Outside are moulds of metal that look as if they were cast in small bathtubs. To an untrained eye the 800kg alloy ingots don’t look like very much, but they’re estimated to be worth R300,000 each, depending on where prices for the platinum group metals happen to be.

London AIM-traded Braemore is working with state-owned mineral and metals research company Mintek in developing a PGM smelting system that can handle high chrome levels – a headache in the traditional smelters used by the majors – as well as to extract as much of the precious metal as possible.

still some boxes we’d like to see ticked

Braemore has an exclusive 10-year licence to the ConRoast technology developed by Mintek. More importantly, it’s an environmentally friendly process and doesn’t pump sulphur into the atmosphere, a major drawback of the traditional system. Impala Platinum is spending R1bn upgrading its smelter capacity at Rustenburg. Of that, R460m is going towards technology to reduce sulphur emissions.

ConRoast is coming to the end of an unusually extensive testing period just in time for the industry. An estimated 2 million tonnes of extra PGM concentrate will come on to the market by 2015 if all planned projects by majors and juniors come on stream.

There were 2.2 million tonnes of concentrate in 2005 and that’s grown to the point where smelters operated by the majors – Anglo Platinum, Impala Platinum, Lonmin and Northam – are nearing capacity and might have to turn away material from juniors to focus on concentrate from their own projects.

The juniors are also heavily penalised if their chrome content exceeds a certain percentage in concentrate, something that might encourage them to look to a technology where that isn’t such a concern. It also allows them to pass on material that might have been put on dumps.

“We’ve had quite a few companies approach us,” said Braemore's then acting joint CEO David Russell, adding that Mintek has given the testing process its approval. That would go towards allaying any fears companies might have about using different technology.

Some juniors are still cautious. “There are still some boxes we’d like to see ticked. The jury is still out whether it works. And there’s a bit more technical work that has to be pushed on it before we’d be comfortable with it as a new technology,” says Platmin COO Terry Holohan.

AIM and TSX-listed Platmin could be listed on the JSE within 18 months. Platmin’s Grootboom project, the third in the pipeline, could produce 96,000 oz/year of platinum if it could process concentrate with a 5% chromite level but only 86,000 oz if that level is 3%,” says Holohan.

“There’s potential for Braemore. If they’re up and going we could make a deal that they process that material. We’re very excited with what they’re doing,” says Platmin CEO Ian Watson, adding the two companies were talking to each other.

Platmin, which has plans to be a 500,000 oz PGM producer, is looking for options for its own smelter, which could be built alongside one of those belonging to a major. Lonmin holds 22% of Platmin, which has three projects it plans to bring into production.

Click Here to subscribe to our daily newsletter

Platmin will complete the bankable study into Mpahlele, the second project in the pipeline, at year-end 2008 and will have to make the smelter decision at the same time it decides on the R4bn mechanised underground mine, with two or three declines and concentrator, early next year, Holohan says.

The 55MW mine would be in production from 2013, but there’s been no commitment from Eskom yet on supplying that power. Studies are under way into self-generation and building that into the bankable study. The power issue won’t derail the project, he says.

SA’s power problems could prompt major companies sourcing concentrate from juniors and need to reduce power consumption by 10% to ask juniors to take up the Braemore option. “There might be encouragement from the majors because they want to use all their smelter capacity for their own production and they might encourage and assist in the development of ConRoast smelters so the other material can go to those smelters,” Russell says.

It’s unlikely the majors will rush to deploy ConRoast themselves. They’re seen as fairly conservative, sticking to the tried and tested smelters already used at their operations. The ConRoast technology uses iron to precipitate the PGMs, not sulphides, and that has implications in the refining process, which would have to install an iron removal facility.

“The gestation period for new technology is roughly 10 to 15 years. This technology is ripe for seeing the light of day,” says Rodney Jones, a specialist consultant at Mintek’s pyrometallurgy division. The technology has been around since 1994. The plant at Mintek has been operating for four years, smelting more than 30 000 t of material, he says.

Braemore is in a Ł1.8m project to double throughput at the smelter facility at Mintek, which is bordered by homes and shopping centres, proving how clean the technology is. The smelter, which has produced 11,000 oz of four PGMs and gold in six months, ran at 1,000t/month of low-grade concentrate.

Braemore is conducting a feasibility study to build a 10MW plant – three times the size of the increased plant at Mintek – in Rustenburg, the heart of the platinum industry on the Western Limb, in 2011. Much study has been done to build a 35MW plant elsewhere, possibly be on the Eastern Limb, where a number of juniors are looking to bring projects into production, or on the Northern Limb, which is seen as a predominantly nickel ore body with PGM by-products.

Braemore had entered an agreement with Pan Palladium to study the Grass Valley prospect on the Northern Limb as it seeks to become involved in more than just smelting. “We don’t wish to just refine. We want to get right into the resources sector and use our access to this technology as a method of entering joint ventures or pool-and-share arrangements to access resources,” Russell says. The deal has been subsequently canned.

Platmin is moving towards production at two opencast platinum mines at Pilanesberg on the Western Limb and could acquire a neighbouring property, says Watson. The obvious property would be Zandspruit, owned by Anglo Platinum, where Platmin has conducted exploratory work.

Pilanesberg, a geologically complex deposit, will be built by year-end and start production during first quarter 2009. At full production it will be a 250 000oz/year PGM mine. The capital cost of the project is R1,6bn but the company will raise up to R2,6bn to fund working capital.

Though Eskom has agreed to supply the mine with power, depending on industry-wide savings of 10% of electricity Platmin is installing a leased 10MW power generator that can keep the UG2 plant, which consumes less than the Merensky concentrator, operational during blackouts.

If the Grootboom project is unable to secure a power contract from Eskom the generator sets could be moved to that project and converted to heavy fuel use and used continuously.