Sun setting over large platinum mines of western Bushveld as project capital dries up

Mogalakwena platinum group metal mine

THE sun may be setting on the large platinum group metal (PGM) mines of the western Bushveld, an area where the sector has its roots following the first discovery of metal some 100 years ago by famed geologist, Hans Merensky.

This is according to analysts cited by Bloomberg News which said capital spending on new production in South Africa’s PGM sector has dried up.

“The western limb region has been the bedrock of South African platinum and that is in decline,” Mandi Dungwa, an analyst at Kagiso Asset Management, told the newswire. “It is the end of an investment cycle in those type of mines.”

In June, Implats balked at spending R12bn on a new mine at Waterberg on the northern limb of the platinum belt whilst Anglo American Platinum delayed a decision until the second half of next year on whether to spend as much as $1.5bn expanding output at its Mogalakwena mine, said Bloomberg News.

“With Covid-19, all the companies went into cash preservation mode,” said Arnold Van Graan, an analyst at Nedbank. “Over the next decade, there could be a big step change down in PGM production, if the industry does not invest,” he said.

“The sun is definitely starting to set over some of the conventional, deep, high-grade, western limb areas,” said Johan Theron, a spokesman for Impala Platinum. “It’s exactly like gold: there is more gold, but it’s deeper and requires more capex and prospects of making a return are slim,” he said.

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