Producing platinum in South Africa

Platmin Limited’s (Platmin) platinum group metal (PGM) exploration, development and mining activities are located on the western limb of the South African Bushveld Complex, which is host to some 75 per cent of the world’s PGM resources. The company is currently establishing itself as an independent producer of PGMs, as it works at ramping up production at its flagship Pilanesberg Platinum Mine (PPM), where site establishment activities started in October 2001 and where the first concentrate was shipped only 18 months later, in April 2009.

In addition to PPM, Platmin has recently acquired an interest in the Sedibelo West project, which is contiguous to PPM, and the company is currently completing a feasibility study on the nearby Magazynskraal PGM project on behalf its owners.

In speaking to African Business Journal, PPM general manager Casper Badenhorst points out the location of PPM on the well-explored western limb of the Bushveld Complex. “We are fortunate to be mining an orebody which is only 80km from Rustenburg, South Africa’s ‘platinum capital’, and where we have access to established and excellent infrastructural facilities.”

The investment logic for the consolidation of the western limb around PPM is compelling and Platmin is well-positioned to play an important role in this process.

Importantly, this vision of consolidation is shared by the local Bakgatla Ba Kgafela Tribe (BBKT), which owns significant minerals rights in the area, and is the black economic empowerment partner of choice for both Platmin and its major shareholder, Pallinghurst Resources.

He adds, “the Magazynskraal project is likely to be a major project for us. We’ve just completed an extensive drilling programme and we are now beginning to look at conducting a prefeasibility project, which we hope to complete in the next financial year.”

Badenhorst explains that while it has taken some time to come to grips with the complex geology within the PPM pit, extensive drilling and interpretation has led to a far greater understanding of PPM’s orebody.

“This has occasioned some modifications to our original mine plan,” explains Badenhorst. “We also have an excellent team of geologists working on site, who have the necessary expertise to map out the various phases in the pit. Included among this team are geological observers, who have been recruited from the local community and trained to undertake this responsible role.”

The operation has robust health and safety awareness campaigns in place, along with an active AIDS awareness programme. This is in line with a strong tradition of medical surveillance in the South African mining sector, which for many years was the sole provider of medical and health care in more remote rural communities where mining activities have historically been based. Platmin has implemented OSHAS 18001 and ISO 14001, internationally-recognised safety and health and environmental standards, and achieved ongoing compliance with these following an audit undertaken in 2010.

Key strengths

Platmin’s strengths lie in a number of areas. Its investment appeal results from its strong partnership with the BBKT, a 350,000-strong community who have already experienced meaningful delivery as a result of the operation of the mine. Currently, around 41 per cent of Platmin’s employees have been drawn from the local community.

Badenhorst says, “Importantly, Platmin is positioned on one of the last shallow platinum deposits on the western limb. Labour productivities for surface and shallow mines are far higher than for deeper mines, while electricity consumption is significantly lower. So this shallow region has embedded, relative cost advantages”.

South Africa is an ideal place for Platmin’s business, being a country with a long history of mining, laws that are investor friendly and an ideal infrastructure for the development of new mines.

From a corporate perspective, the company’s board and shareholder base comprise some real heavyweights in the global resources sector, putting Platmin in an advantageous position when it comes to accessing capital to further develop its assets, as has been demonstrated in the past year.

Since the recession and the sharp drop in metal prices in late 2008, PGM prices, in dollar terms, have recovered to much healthier levels, driven by recovering demand from the automotive sector. This sector traditionally accounts for more than 40 per cent of platinum consumption. What puts the PGM sector in a particularly strong position is that the precious metals which constitute the suite of PGMs, are frequently interchangeable, so that if there is a slump for instance, in the price of one of the metals, it is likely to be followed by un uptake in demand from one of the demand sectors, thereby generally supporting the price.