IVANHOE Mines was confident it can raise the $1.4bn for its Platreef platinum project in South Africa, said Ivanhoe Mines president and CFO, Marna Cloete.
In addition to a recently issued convertible bond, the company is finalising negotiations for a streaming agreement and senior debt facility, said Cloete.
Speaking at the 2021 PGMs Industry Day, an online conference, Cloete said that first production was only scheduled for 2024, so there was still time to secure offtake agreements, which would be facilitated by the fact that the project had robust economics, with costs expected to be in the lowest quartile of the cost curve.
Cloete said Ivanhoe’s experience showed there was capital available for new projects in South Africa, but it depended on the quality of the assets. It would not be so easy to raise capital for marginal projects.
Investor concerns raised about the project were to do with licensing, which required predictability, transparency and certainty on timelines, she said. There were also risks around energy supply with the majority of South Africa’s power supplied by Eskom, the beleaguered state-owned power utility.
RISKS TO NEW SUPPLY
Cloete and Richard Stewart, COO at Sibanye-Stillwater, said green power was going to be increasingly important for platinum miners.
Eskom posed twin challenges, said Stewart. There was continuity of supply risk owing to the aging nature of Eskom’s fleet and the question of its carbon intensity. The PGM industry’s downstream customers were targeting carbon neutrality, he said.
Stewart said the resilience of growth projects depended mainly on market demand. In the medium term, Sibanye-Stillwater expected demand would remain stable, driven by the automotive industry. The hydrogen economy was also slowly gaining momentum, which made the minor metals in the PGM basket, such as iridium, rhodium and ruthenium, increasingly important.
Asked whether Sibanye-Stillwater would revisit shuttered Lonmin projects in the current market environment, he said there were undoubtedly good opportunities in the Marikana complex, but it depended on the market outlook over the next three, five and 10 years. “We are looking at other options as well,” he said.
Sibanye-Stillwater had ample PGM resources to meet demand into the future. The challenges in developing new projects did not stem from mining but from intense competition for capital, sourcing stable power and regulatory uncertainty.
Thando Mkatshana, CEO of ARM Platinum, said projects that can use existing infrastructure, such as ARM’s Two Rivers project, would be in the best position to proceed. ARM prioritises projects that can come on stream in a relatively short period of time, and Two Rivers (which is being developed in partnership with Impala Platinum) would be in production within the next three years.
It was also important for new projects – such is the case with Two Rivers – that they have access to smelting capacity. The project will develop Merensky reef, which has a significant proportion of lower-priced platinum, but its advantage is that it will support ARM’s platinum/palladium/rhodium balance and will also give the group greater access to metals of the future, such as nickel and copper.