There are precious few opportunities left for platinum properties
in the Bushveld, explains Rene Hochreiter, a platinum analyst with
Nedcor Securities, speaking at the Investing in Mining Indaba 2004
in Cape Town.
“Access to properties will have to be gained through
dealmaking in future,” he says.
There are very few greenfield properties left, and the downdip
properties are too deep to mine at current prices.
What also influences the attractiveness of a platinum property is
the platinum:palladium split.
In the north-eastern Bushveld, the ratios of platinum to palladium
are low, making these properties less attractive.
The platinum market on the demand side is about a
seven-million-ounce market at presenstone crushing plant thailandt.
The autocatalyst market dominates this, at about 3,2-million ounces
in this calendar year.
On the supply side, Anglo Platinum dominates the market, with
Impala Platinum and Lonmin in second and third places.
There has been a perpetual supply shortfall of 600 000 oz which
could grow to a million ounces by 2015.
“There has been a shortfall for the last seven years and this
situation is set to continue unless the rock crushing equipment pricejewellery market falls off
or South Africa increases its supply,” says Hochreiter.
In looking at the key drivers, the platinum price is about $837/oz
at seven rands to the dollar.
Hochreiter estimates that, in the long term, the price should
average in the $650/oz range.
Cash costs are about R75 000/kg average on a weighted basis, the
best being about R59 000 at Lonmin and the worst is R106 000/kg at
Northam.
“american impact crusher vertical shaftIf we had to start a 100 000 oz platinum-mine today, it
would cost about R1-billion,” he adds.
On the Western Bushveld cash costs are about R50 000 (Amandel-bult)
to R106 000 (Northam).
Some of the smaller properties immediately to the north of the
Pilanesberg are out to tender at the moment.
Placer Dome is involved in this area with the Bakgatla people and
then there are also a number of smaller players such as Boyntonstone crusher supplier in uae and
Nkwe Platinum.
The south-western Bushveld is well tied up, as all the bigger
mining houses having a presence in this area as well as Aquarius
Platinum.
In the Northern Limb of the Bushveld near Potgietersrus, Anglo
Platinum once again dominates, with it operating Potgietersrus
Platinum Mine (PPRust).
The costs at PPRust run at about R75 000/kg mainly because of the
openpit nature of the project. Anooraq, Pan Palladium, Thabex,
Caledonia and African Minerals are represented in this area.
In the north-eastern limb of the Bushveld, the 1:1
platinum:palladium ratio makes this the highest-cost area to mine
in the BIC.
Angloplat, Barplats, Impala and Messina are mining in this area
already.
Aquarius, Mvelaphanda, Cluff, and Jubilee have rights in this
area.
In the south-eastern Bushveld there is no mining as yet, and it
would be quite expensive at an estimated R115 000/kg to start
mining here, estimates Hochreiter.
Cluff is looking at some of the prospects in the Loskop Dam area at
its properties at Blue Ridge and Sheba’s Ridge.
At current economics and prices, the Merensky Reef remains the most
profitable to mine.
The lowest grade is the Potplats reef, though it is very low-cost
to mine.
“At the current PGM minerals basket price, I think it is
unlikely we will see many new entrants, if any, into the platinum
business”.
Black-empowerment companies may need to team up with established
players to gain a foothold in this area.
When it comes to downdip areas, Hochreiter calls on the example of
Northam Platinum, which went “through ten years of pain and
took twelve years before it paid its first dividend”.
The platinum market does hold the promise of higher prices.
However, Hochreiter is of the opinion that, at present, the only
way to a good platinum property is through dealmaking.