JOHANNESBURG (miningweekly.com) – Flexibility is a re-emphasised aspect of platinum group metals (PGMs) mining strategy. Changed demand has resulted in the need to twist and turn quickly to benefit from the rise in prices of metals in the PGM basket.
Royal Bafokeng Platinum (RBPlat) CEO Steve Phiri made special mention of flexibility when reporting before-tax profit of R316-million during this week’s presentation of turned-around 2018 financial results. (Also watch attached Creamer Media video.)
“The tables have turned against platinum, unfortunately, and therefore the favoured child in the family has become the less favoured in the market. Therefore, it’s correct to become a PGM producer in recognition of the importance of the contribution made by the other metals,” he told Mining Weekly Online.
Phiri’s core approach to growing and developing RBPlat – the black-owned, black-controlled and black-operated midtier PGMs producer – has always been one centred on creating and maintaining flexibility.
In 2017, with the palladium price at $860/oz and the rhodium price at $1 025/oz, RBPlat stopped mining the upper group two (UG2) reef at South shaft and redeployed its mining crews from lower-grade UG2 reef panels to higher grade Merensky – for long the preferred PGMs reef.
But when, at the start of this year, the palladium price soared above $1 500/oz and the rhodium price above $2 700/oz, RBPlat reopened South shaft and resumed mining the UG2 reef, despite its narrowness, low grade and a high dilution. The UG2’s big plus factor is that it is laden with palladium and rhodium and throws in chrome as a co-product.
Will the new Styldrift mine access both UG2 and Merenksy?
“We’ve created that platform, but the priority for now will be the mining of Merensky reef. It’s high grade and then in order to provide us with that flexibility should something go wrong with a panel, or panels, or mining area, we’ll mine that UG2. For now, there are no immediate plans to mine UG2 at Styldrift, but access points have been created,” said Phiri.
The boost of palladium and rhodium in the swing to petrol cars has put UG2 on a new pedestal and giving the platinum-constrained business a strong upward thrust.
“We were called platinum producers, and mistakenly so, because we gave preference and priority to platinum and ignored other metals which could later become very vital and important to the revenue basket.
“People lose sight of the fact that when you mine a reef, you mine a reef that contains platinum, palladium, rhodium, ruthenium and all other metals.
“You don’t select platinum and leave all the other metals behind. You have what you have and you’ve got to make good with what you have,” Phiri added.
At the same time, platinum bullishness is growing. Platinum is an integral part of the success that is being achieved in making diesel vehicles cleaner.
“We’ve been doing quite a lot as an industry through the International Platinum Association,” said Phiri.
Diesel alliances have been able to prove to governments and municipalities in Europe that diesel engines are able to perform similarly or even better then petroleum cars with the proper platinum loadings.
In Germany, Euro 5 cars will be allowed into the cities provided they emit below 270 g/km. Euro 6 cars are already emitting at a level of 80 g/km and below and retrofitted cars are emitting below 270 g/km.
That brings confidence to the consumer, made up mainly of the leasing and rental companies.
“The sentiment is improving,” said Phiri, with increasing hydrogen infrastructure being put in place to power platinum-catalysed fuel cells.
The World Platinum Investment Council said on Wednesday that global platinum demand is set to increase by 5% to 7 740 000 oz in 2019 owing to a rise in investment demand, which is expected to offset lower forecast demand in automotive, jewellery and industrial segments.
Total investment demand in 2019 is forecast to be 530 000 oz, as exchange traded fund growth is accompanied by ongoing bar and coin demand.