Amplats CEO Natascha Viljoen keeps market guessing on Mogalakwena PGM expansion

ANGLO American Platinum’s (Amplats’) Mogalakwena expansion could deliver about 300,000 ounces a year of platinum group metals (PGMs) – the low end of guidance set down in the project’s original scope.

Yet there’s little certainty on when production will be delivered or indeed if it will be exceeded; or even how capital expenditure will be phased to develop it. It’s a situation that had analysts looking for answers.

Amplats CEO, Natascha Viljoen, insists however her firm’s approach is critical to Mokgalawena. The mine has a century of resources but the market in which it’s operating is changing quickly, and is hard to read.

In addition, processing technology is changing which alters how Amplats may set about Mogalakwena’s expansion. The company is also running an assessment of whether to expand the mine’s current open pit – which would have consequences for the nearby community – or build a potentially lucrative underground mine which would be economically rewarding as it is high grade, meaning less waste.

“Everyone’s perception of this project is that it’s around a concentrator expansion,” says Viljoen in an interview following the firm’s full-year financial results on Monday. “The reality is way more.”

In 2018, when former CEO Chris Griffith was first flagging Mogalakwena’s expansion there was talk of R12bn in capital spend involving construction of a third concentor taking the mine’s palladium production to 270,000 oz and 250,000 oz in platinum annually. But four years is an extremely long time in the PGM market.

“That’s why we’ve been emphasising the fact it’s six work streams that we need to concentrate on,” says Viljoen. The workstreams range from resource development (whether to go underground) to environment, sustainability and governance – the project’s impact on the North West province community as one example.

Analysts’ questions at the financial results focused on issues such as Amplats’ capex plans given the broad R13bn to R22bn range it had previously provided and which has been complicated by rapidly increasing mining inflation. They also wanted a clearer fix on Mogalakwena production, and when a project decision would be made. Mogalakwena, however, doesn’t seem to meet the normal ideas of a project.

“The concentrator expansion (a third concentrator) without considering the optimised open pit or super pit and surface impact that would bring to the party are all considerations as we mature our understanding of this asset,” says Viljoen.

The risk in getting the calculus posed by the six work streams wrong is poor use of money, Amplats fears. But some capex decisions are being made nevertheless, incrementally. As Viljoen spoke, Mogalakwena started drilling on a R2.1bn exploration programme, that will help decide on an underground mine.

“The only big capital decision at this time is the concentrator and we only need to do that in 2026,” says Viljoen. “We still have time to make that decision … whether we want to spend that capital.”

The concentrator is likely to be relatively small in scope at first before building it out – if needed – in line with market economics. Similarly, the notion that an underground mine will be replacement for open pit mining, or expansion is not easily answered. Viljoen said it will be a combination of both.

The upside of running inter-dependant workstreams in this way is that Mogalakwena provides Amplats with optionality, described by Viljoen as “the beauty of the project”. That’s important as the PGM market is likely will change in line with the rate of adoption of electric vehicles and how the hydrogen economy makes it into the economic mainstream.

“The work now is to set it up so we can pull whatever lever we have to pull, and become agile within this environment,” says Viljoen.