RECYCLING of platinum group metals (PGMs) would become increasingly important to the fortunes of the precious metals as primary supply was unlikely to increase, said Phoevos Pouroulis, CEO of Tharisa.
Commenting in the firm’s year-end results presentation today, in which Tharisa announced a final dividend of four South African cents per share, Pouroulis said new PGM projects in South Africa would not represent supply growth.
Pouroulis said that “any new projects are mere replacement ounces rather than new supply coming into the market”. He added that recycling of PGMs “remains the most significant determining factor for the supply-demand fundamentals”.
According to the World Platinum Investment Council (WPIC), platinum would move into a 303,000 ounce supply deficit next year owing to disruptions to South African production. This would represent a 1.1 million oz turnaround in the metal’s fortunes year-on-year.
Said Pouroulis: “The complex operating environment in the major producing region South Africa, which has had to deal with inflationary pressures and erratic electricity supply, does mean that the supply side will remain constrained for some time”.
Eskom loadshedding, which has been at a record high this calendar year, resulted in the country’s three largest producers – Impala Platinum, Anglo American Platinum and Sibanye-Stillwater – stockpiling about 100,000 ounces of PGMs in the third quarter.
Tharisa’s dividend announcement was 17.5% of net profit after tax, in excess of the 15% of profit dividend policy. It takes the payout for the entire 12 months ended September 30 to seven South African cents per share, equal to a $21m (R362m).
This was on the back of increased production of PGMs and chrome. Coupled with rand weakness against the dollar, the higher output from Tharisa’s mine – situated in the North West province – helped offset lower PGM prices. Chrome prices were higher, however.
Tharisa has targeted PGM output of 175,000 to 185,000 ounces for the current 2023 financial year compared to production of 179,200 oz in the year under review – an increase over 2021 of 13.6%. Chrome output is guided to 1.75 to 1.85 million tons (Mt) this year (2022: 1.56Mt).
Commenting in a presentation, Pouroulis said the “clock was ticking” on 24 month timeline set down for the firm’s 85%-owned, $391m Karo Platinum project in Zimbabwe. “We have got 21 months left and construction has started,” he said.
The project aims to produce 194,000 oz/year in PGMs, higher than the previous production estimate of 150,000 oz/year. Pouroulis said in an interview with Miningmx that the decision to lift output – and reduce the life of mine of the open pit by three years to 17 years – was an attempt to maximise that unit cost per output given the “fairly significant investment” in water and power infrastructure. “It was a relatively simple decision”.
A portion of the finance will come from a $25m to $50m bond to be listed on the Zambezi Stock Exchange on December 16. The expected close of the bond was due on December 9. The closure date had been extended whilst the offer received ‘prescribed asset status’ that would boost its chances, said Pouroulis.
The project once completed would double Tharisa’s PGM production to nearly 400,000 oz/year while the company was also focused on producing two million tons in chrome from the South African mine.
This target would partly turn on the performance of the firm’s R800m Vulcan smelter aimed at improving metal recoveries to about 82% from 65%. Chrome recoveries came in at 68.3% for the year under review compared to 63.3% in the previous year, a near 8% lift.