 Miners Anglo Platinum and Xstrata Alloys have formed a joint
venture to develop a platinum-group metals (PGM) mine and
concentrator plant on the Eastern Limb of the Bushveld Complex, in
the Mpumalanga Province.
The project is expected to involve capital expenditure of some
R1,35-billion, or $200-million, up to commissioning, to which
Xstrata and Anglo Platinum will each contribute equally.
The companies believe that the project benefits from a life-of-mine
of about 20 years at a planned milling rate of 200 000 t a month
and an estimated head grade of 3,74 g/t.
Xstrata will be responsible for developing and operating the
underground mine, contributing its expertise in mechanised
room-and-pillar mining, while Anglo Platinum will construct and
manage a 200 000 t a month PGM concentrator.
Anglo Platinum will buy Xstrata's 50% share of PGM concentrate for
further smelting, refining and marketing of finished product.
Xstrata will construct a beneficiation plant at its own cost to
process the UG2 chrome tailings arising from the PGM concentrator
and will purchase Anglo Platinum's share of chrome
concentrate.
The announcement comes on the back of Anglo Platinum CEO Ralph
Havenstein's comments at the company's interim results presentation
a short while ago, saying that the company would soon be making an
announcement as to greenfields projects that would be going
ahead.
At the time he indicated that Twickenham was the most likely
contender but an analyst has pointed out that this would not be
such a straightforward venture, as the conventional mining would
require further investment. The mix, he said, is not as favourable
as it is further south where the new venture is.
Trevor Raymond, speaking on behalf of Anglo Platinum, said that the
mine would generate better returns and be up to speed quicker due
to its mechanised nature, an area Xstrata is competent in.
The Mototolo joint venture is tipped to produce about 132 000 oz of
platinum and 82 000 oz of palladium in concentrate each year.
A platinum industry analyst, speaking on conditions of anonymity,
told Mining Weekly Online that, while no surprise, the project does
make sense as the it will be cheap to start up and will be
on-stream quickly.
Returns should be better than would be found with other operations
that would require a longer start-up period.
The Department of Minerals and Energy too will be pleased at the
use of resources in an underused area and over 1 000 jobs will be
created.
From Xstrata's perspective, the analyst says that they already had
property and to start up with a platinum force such as Anglo
Platinum behind them would be simpler. In addition the company will
only be mining the metal, not selling it, and is unlikely to become
a major platinum miner this way.
Xstrata spokesperson Etienne du Preez explains, “the project
certainly offers Xstrata an initial entry into a commodity that
benefits from strong market fundamentals and one that is attractive
to us, as we have signalled previously”.
But the analyst points out that, if it is a stepping-stone into
platinum, where the company has previously expressed interest, it
is only a small one, rather it would make more sense for the
company to take over a platinum producer.
Du Preez, however, declined to comment on whether this signals the
start of a new era for the company: “At this stage we cannot
comment on whether this project will lead to Xstrata developing
further PGM projects.”
But CEO Peet Nienaber indicated in a statement that the venture
“provides Xstrata with an entry into an attractive commodity,
working with an experienced partner.
“The combination of Xstrata's expertise in developing and
managing underground chrome mines, together with Anglo Platinum's
processing and downstream capabilities, will enable both partners
to realise a low-cost high-return project with a rapid development
profile.” The venture, a pooling and sharing arrangement,
which sees each partner pool its assets and take an equal share in
the profits, is a shift in strategy for Anglo Platinum from five
years ago.
The mine has recently forged a few relationships of this kind, such
as Marikana, while another example is the KPM deal.
A similar example exists with Aquarius Platinum as a contract
miner. However, this mine differs as Aquarius is mining and
concentrating the ore whereas this mine requires that Xstrata sink
a new decline shaft and Anglo Platinum build a concentrator, which
is where its expertise lies, on the Helena farm. Industry
commentators have indicated that the Anglo Platinum does not
produce value when mechanised mining is used instead of
conventional methods, and it makes sense for the miner to take
Xstrata as a partner.
Construction of the mine and concentrator is expected to start in
the third quarter of 2005, with initial production of PGM ounces
anticipated in the last quarter of 2006 and full production in the
third quarter of 2007.
Raymond adds that the concentrator will be constructed for the
purposes of dealing with the UG2 ore mined at Mototolo and will be
distinct from any other possible future operation.
Each mining firm will contribute a similar amount of in-situ PGM
reserves and resources from Xstrata's Thorncliffe farm, adjacent to
its Thorncliffe chrome-mine and Anglo Platinum's bordering farm
Richmond, part of its Der Brochen project area, to the
venture.
Both parties said they would work to comply with the requirements
of South Africa's Mineral and Petroleum Resources Development Act
and Charter, which stipulates that 26% of mine equity or equivalent
output should be in the hands of previously excluded individuals by
2014.
Each miner has to ensure that they comply with the Act, which has
five-and-ten year plans although, at the moment, it would be
premature to discuss how they plan doing so.
The rights under which the area will be mined are old-order rights
and each party will have to satisfy the Charter requirements.
Booysendaal, for example, is a 50:50 venture with an empowerment
partner.
Havenstein added: “By leveraging off the strengths and
experience of both partners, this project will accelerate Eastern
Bushveld platinum development and will also create some 1 100 new
job opportunities.
“The formation of the Mototolo joint venture will increase
Anglo Platinum's production of platinum-group metals in a capital
and cost-efficient manner.”
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