[miningmx.com] – ADDITIONAL platinum metal sourced from recycling is one of the major reasons why the platinum market remains weak and this source of metal is being actively promoted by customers as an alternative to primary supply from South Africa.
That’s according to Royal Bafokeng Platinum (RBPlat) CEO, Steve Phiri, who told financial media and analysts during a presentation of the company’s financial results for 2014 in Sandton today that “… this is a worrying development’.
Phiri added: “Secondary platinum from recycling is being viewed as a substitute for primary supply from South Africa because we are no longer seen as a reliable and sustainable supplier of the metal for various reasons including labour issues and regulatory issues.
“Whether it’s true or false, this is the reality. This is a deliberate effort by customers to reduce their dependence on South Africa.
“We need to address this situation and we will do it by providing confidence. That confidence will come through labour stability; through operational stability; through less strikes, less section 54 stoppages and more regulatory certainty.’
According to statistics provided by RBPlat, global platinum production dropped 22% to 4.7 million ounces in 2014 with South African mine output dropping below three million oz from 4.4 million oz in 2013. However, supply from platinum recycling increased 2.3% to two million oz in 2014, mainly owing to more platinum-rich diesel catalytic convertors being scrapped in Europe.
That issue aside, RBPlat turned in an excellent set of results showing what could be achieved by an efficient platinum operator even under current grim market conditions provided there were minimal labour disruptions.
RBPlat was unaffected by last year’s five month strike and the group has just signed a five-year wage agreement with the National Union of Mineworkers.
In the year to end-December, RBPlat increased headline earnings 38.2% to 239 South African cents a share (2013: 173c/share) on the back of higher production which drove a 31% increase in operating profit to R754.4m (R573.5m).
Said Phiri: “This is juicy stuff. I know I am bragging here, but if you are beautiful, you are beautiful.’
No dividend was declared. RBPlat’s stated policy is that it will not pay a dividend until the R11bn Styldrift 1 mine – currently under development – ramps up to reach steady-state production which is expected in 2019.
That is likely to be followed by a decision to develop the Styldrift 2 mine where a feasibility study is to be undertaken in the second quarter of this year following the positive findings of the pre-feasibility study.
RBPlat current has cash on hand of R1.9bn and a total of R2.02bn in funding available. CFO Martin Prinsloo said the company was likely to raise between R3bn and R4bn in term loan facilities later this year in order to meet peak funding requirements on Styldrift 1 during 2016.
“We don’t need that money yet, but the best time to raise funds is when you do not need them,’ said Prinsloo.
He added that once Styldrift 1 was operating at steady state, RBPlat would have no problem paying dividends despite meeting the capex required for Styldrift 2 should a decision be taken to go ahead with that development.
