JOHANNESBURG (miningweekly.com) – Platinum group metals (PGMs) and chrome co-producer Tharisa Minerals, which predicts that a global chrome ore deficit is on the horizon, has published details of its strategic Vision 2020 growth thrust.
“Tharisa is entering an exciting growth phase,” CEO Phoevos Pouroulis said in the release to Creamer Media’s Mining Weekly Online.
The combined capital expenditure (capex) earmarked to achieve the strategic growth vision in full totals R760-million.
Vision 2020 is targeting significantly higher volume and higher value production than the JSE-listed company's record operational performance in its 2017 financial year.
By 2020, the new strategy envisions the company delivering at a rate of 5.9-million tonnes of run-of-mine (RoM) material a year, 200 000 oz/y of PGMs a year and two-million tonnes of chrome concentrates a year by 2020 – a significant increase on its record 2017 financial year output of five-million tonnes of RoM, 143 600 oz of PGMs and 1.3-million tonnes of chrome concentrates.
Higher feed grades from improved mining, combined with two optimisation projects and two new processing plants, are poised to add 61 800 oz/y of PGMs and 602 000 t/y of chrome concentrate by 2020, taking production to 200 000 oz/y of PGMs and two-million tonnes yearly of chrome concentrates.
The two optimisation projects involve a combined capital outlay of R160-million and the two new plants under evaluation a combined R600-million, taking potential combined capex to R760-million.
The first of the two optimisation projects involves upgrading the crusher of the Genesis plant at the Tharisa mine in Marikana, North West, which was visited on Tuesday by local and foreign media that included Creamer Media's Mining Weekly Online.
The crusher upgrade is aimed at increasing throughput by 15% or 180 000 t/y, with a potential increase in premium-priced chemical grade chrome concentrate and foundry grade chrome concentrate production of 24 000 t/y and 18 000 t/y.
This project is scheduled to be commissioned in July at an expected capital cost of R90-million ($7.5-million). Operating costs are estimated at R10/t ($83 c/t), with payback in fewer than 12 months.
The second of the optimisation projects is at the Voyager plant, where additional flash flotation and a scavenger plant with high energy mechanisms will target better PGM recoveries and increasing PGM production by 14 000 oz/y. This project is expected to be commissioned in October at an expected capital cost of R70-million ($5.8-million); operating costs are at a likely negligible level and payback again less than 12 months.
“What’s required now is real capital investment in mining operations and proper processing plants,” Pouroulis said of the company's response to the forecast chrome ore deficit.
Vision 2020 takes in evaluation of the feasibility of building two new plants costing R300-million each. The first of these, the Vulcan plant, will facilitate additional recovery of fine chrome from tailings streams. The proprietary process is being developed by Tharisa and a demonstration plant is being constructed. The feasibility study and process design will be undertaken in conjunction with the operation of the pilot plant.
The full-scale Vulcan plant is expected to be commissioned in October 2019, with projected chrome concentrate production of 380 000 t/y. Operating costs are estimated at R50/t ($4.16/t).
The second of the new plants, the Apollo plant, will be designed and built as an independent integrated PGM and chrome plant that will process upper group one (UG1) reef and middle group (MG) reef RoM. It will be designed in two phases, the first phase treating 50 000 t a month and the second phase doubling that capacity. UG1 reef in the west pit is easily accessible.
The feasibility study is being conducted and testwork and resource estimation are in progress. Plant construction will take 12 months, with commissioning planned for March 2020.
Apollo is expected to produce 6 000 oz/y of PGMs and 180 000 t/y of chrome concentrates, with operating costs, including mining, estimated at R225/t ($18.8/t).
Both the Vulcan and Apollo plants are subject to feasibility studies and, if approved, will be funded through a combination of cash flows and drawdown from debt facilities.
The strong demand for chrome ore is being driven by 3% to 5% yearly growth in global stainless steel production, for which chrome ore is fundamental with 4 t of stainless steel requiring 2.5 t of chrome ore, which turns into 1 t of ferrochrome.
China currently produces and consumes more than half of the world's stainless steel and Chinese ferrochrome capacity is poised to increase by a million tonnes this year, some of it replacement tonnes as older furnaces give way to new environmentally friendlier furnaces.
"So, in the next 24 months, we see up to a million tonnes of chrome ore deficit,” Pouroulis said at the media briefing.
Current financial year guidance remains at five-million tonnes of RoM, 150 000 oz of PGMs and 1.4-milllion tonnes of chrome concentrates, of which 350 000 t will be specialty grade chrome concentrates that fetch prices higher than metallurgical chrome.
Speaking at Tharisa's large 17-year-life opencast PGM and chrome mine, Pouroulis said of the looming chrome ore supply shortfall: “It’s going to be quite interesting to see how the market reacts to that, and what the supply-side response will be to higher prices.”
When prices hit $390/t last year, there was a strong supply-side response from South Africa, Turkey, Oman, Pakistan and even Brazil, with some liquidating historical stockpiles and seizing quick entry opportunities. These are facilitated by the chrome ore market having lower barriers to entry than PGMs, primarily because of China's ability to absorb multiple grades of feedstock.
Tharisa Minerals COO Michelle Taylor put $200/t as the sustainable price for metallurgical grade chrome, while emphasising that just as Tharisa has a basket of PGM metals, it also has a basket of chrome commodities, consisting of 75% metallurgical chrome and 25% specialty grade chrome, with chemical grade chrome concentrte attracting at least $50/t more than the metallurgical grade product. Tharisa also produces foundry grade chrome concentrate, which again attracts a healthy premium; current pricing is $600/t, up on last year’s $500/t to $550/t.
Importantly, Tharisa is producing more specialty grade concentrate.
South Africa, as Taylor pointed out at last year’s Chromium 2017 in Johannesburg, is an irreplaceable global supplier of chrome ore and ferrochrome, which is, in turn, an irreplaceable component of China-dominated stainless steel production.
As the dominant global chrome ore producer, South Africa in 2016 delivered half of the world’s production of chrome ore. South Africa then used half of the chrome it produced as feedstock for domestic ferrochrome production and exported the remaining 8.5-million tonnes, overwhelmingly to China.
Seventy-three per cent of China’s chrome imports come from South Africa’s chrome-mining industry, which employs 17 500 people who receive R4.2-billion a year in salaries and wages.
However, in ferrochrome, South Africa has been forced, through mainly negative Eskom-induced power factors, to cede its one-time No 1 global position to China, which in 2016 produced 43% of world ferrochrome output compared with South Africa’s 33% of world output.
Tharisa received its first mining rights in 2008, the year of the global financial crisis and the Eskom electricity crisis, which threw the mine feasibility study, which at that stage included ferrochrome production, on its head, prompting the creation of the current low-cost high-value integrated processing unit of PGM-and-chrome concentrates, which is standing it in good stead. The surface area is a consolidation of 116 farms, undertaken with the company's black economic empowerment women's grouping, from which the company name is derived. The first prospecting rights were submitted in 2004, the year of legislation change, when the South African government became the custodian of the country's mineral rights.
The MG reef package has six chromite layers and ranges in thickness from 50 m in th west to 74 m in the east. PGMs are concentrated in three of the MG reefs.
The openpit mineral reserve of 78.3-million tonnes is located on the south of the western limb of the main PGMs and chrome producing area of South Africa, 35 km from the town of Rustenburg.
Mining of five-million tonnes a year is at an average stripping ratio of 9.6 on a cubic metre to cubic metre basis.