MERAFE Resources and Glencore are to extend an agreement to produce platinum group metals (PGMs) which occurs as a by-product in the chrome joint venture.
This will involve the expansion of a processing plant on the eastern half of the Glencore-Merafe controlled chrome properties with a cost of R117m (R585m in total) falling due to Merafe in terms of its 20.5% stake in the joint venture.
An agreement to expand an improve the processing plant at the Kroondal Mine to treat PGMs on the western half of the joint venture’s properties had been profitable, said Merafe today. The improved and expanded plant on the eastern side would be built at the Thorncliffe mine, it added.
The move is interesting because PGM prices have weakened considerably this year following weak demand in China and as automakers destock heavy inventories, some of which was built up during Covid.
At the time of announcing the first PGM plant at Kroondal, the picture for PGM was significantly different with record prices being set for by-product metals rhodium as well as palladium. However, the joint venture recognises value in the market.
Glencore has never been a fan of the PGM market partly because it is not screen traded and heavily concentrated among a few producers. In 2015, Glencore sold its 23.9% stake in Lonmin which it had previously bought via its takeover of Xstrata.
A number of businesses had adopted the retreatment of mined chrome ore for PGMs including Tharisa and Jubilee Metals, both listed on the Johannesburg Stock Exchange.
