Having produced 1.5-million ounces of platinum group metals (PGMs) since inception, with more to come, fully integrated producer Sedibelo Platinum Mines has successfully weathered the storm of depressed metals prices and emerged cash positive, ready to grow responsibly and take advantage of improved market conditions.
“We persevered through the decade of depressed PGM prices, lived within our means, and are now in a very good space – despite the impact of the Covid-19 outbreak on the global economy,” says CEO Erich Clarke.
He notes that PGM prices, especially that of platinum, have been subdued for many years. While platinum prices have yet to return to historic highs of about $2 200/oz recorded in 2008, palladium and rhodium prices have recovered, driven by a supply shortage of these key metals, critical to produce pollution reducing autocatalysts. However, with the increased importance of hydrogen fuel cells, platinum as well as the other PGMs are likely to benefit from a resurgence in prices.
While Clarke concedes that the recycling industry will continue to have an impact on PGM miners as more catalytic converters are recycled, reducing demand on mining companies, the Sedibelo CEO sees this as an opportunity.
“We need to embrace recycling and incorporate it in our business model. To recycle is the right thing to do, and we see that as an important part of our sustainability credentials,” says Clarke.
During the March 2020 Covid-19 related lockdown, Sedibelo used its time wisely to undertake maintenance, when miners were only permitted to operate at 50% capacity. Sedibelo continued to pay base salaries to all its 1 600 employees during the lockdown. This supportive approach is symptomatic of Clarke’s inclusive leadership style, which has served the company well, and sustained a loyal workforce with a minimum of staff turnover and industrial action. When the lockdown was lifted, the PGMs producer was able to seamlessly ramp up production, and managed to return to its planned productivity level, achieving a record 2020 from a financial point of view.
The company, whose openpit operations are based on the Western Limb of the Bushveld Complex, attributes its success partly to strict cost management.
“Given the high volatility in PGM prices, we apply a variable cost base instead of a fixed cost base, aiding our profitability, especially when PGM prices are very depressed. We have created flexibility, which we aim to maintain, even as we venture underground into our shallow deposit. This has helped us and represents a definite advantage,” says Clarke.
When prices were at their worst, Sedibelo had the flexibility to “right-size” its operations and managed to scale back its production without sterilising any part of its orebody.
Going forward, the challenge will be to optimise Sedibelo’s revenue stream as metal prices increase, “without our costs running away with us”, states Clarke.
However, with a background of more than 20 years as a CFO, financial control comes naturally, and he is uniquely positioned to successfully manage this challenge.
Boasting an attractive 90-million-ounce reserve base, of predominantly shallow ounces, Sedibelo’s operations allow for the continued safe extraction of PGMs and associated base metals. Sedibelo is proud of its safety record, with six-million fatality free shifts over more than a decade.
Besides its PGM operations, the operation is also equipped with a standalone chromite recovery plant, which for the past two years has contributed to the company’s profitability.
Excluding 2020, the results of which are not public yet, the company has been producing about 140 000 oz/y of PGMs over the last three years and has “great abilities and plans to expand”, notes Clarke, adding that Sedibelo currently has an offtake agreement with PGMs producer Impala Platinum..
Its growth plan comprises expanding its contiguous asset base, which includes developing its Triple Crown underground operation, leveraging off existing infrastructure at its adjacent openpit operation using energy efficient methods and technology. This is expected to more than triple Sedibelo’s yearly output of PGMs as its untapped resources come on-stream in years to come.
The Triple Crown assets are also shallow, extending 700 m below the surface. Feasibility studies have recently been finalised and Sedibelo believes it can mine these assets at the industry’s lowest cost quartile, “contributing very positively to Sedibelo’s profitability”, states Clarke.
As Sedibelo increases its capacity and in support of its growth ambitions, the company has invested in the Kell Process, which Sedibelo is a part owner of in Southern Africa. Kell is a patented hydrometallurgical alternative to smelting that offers an economic, sustainable and greener means to beneficiate metals, achieving higher recovery rates of precious and base metals. Critically, Kell only uses 18% of the electricity used in conventional smelting. The company has successfully completed an extensive Kell pilot project. Once in place, Kell will enable Sedibelo to benefit from the entire “mine-to-market” value chain.
As Sedibelo advances its growth plan, it could potentially also seek a stock exchange listing. In addition to a Johannesburg listing, it is likely Sedibelo will dual list on one of the world’s major stock exchanges.
The company’s response to the current Covid-19 outbreak has been focused on the health of its employees and the people living in the surrounding communities. Sedibelo complied with all relevant government regulations and widened its support. Besides paying its employees during the lockdown, Sedibelo paid for and delivered about two-million meals to the communities around its operations. “Our employees were paid their full salaries throughout lockdown because we realised how vital this is for the economic wellbeing of the area in which we operate,” explains Clarke.
To best protect its employees at its operations, COO Casper Badenhorst, has introduced some of the industry’s best practices in respect of screening, hygiene and social distancing.
“During the lockdown we implemented effective Covid-19-related systems to keep our employees safe,” says Clarke.
Regardless of its efforts, no company is immune to the Covid pandemic. “Nonetheless, we are not becoming complacent and are ensuring that we maintain our high level of health and safety to play our part in preventing the spread of this virus.”
When employees returned to work from mid-April last year, Sedibelo ensured that screening protocols were strictly adhered to while addressing the economic impact of Covid-19 on the community.
Further testimony to the healthy relationship between the company and its host communities is the conclusion of a settlement agreement between Sedibelo and the Lesetlheng village last year.
Members of the community have occupied the Wilgespruit farm for many years. Following a lengthy court battle to access the mining rights on the farm, Sedibelo and Lesetlheng were instructed to negotiate terms. In the spirit of reconciliation, and after seeking an amicable solution for more than a year, the parties reached an agreement, which is now in the process of being implemented.
As part of Sedibelo’s growth plan, mining activity will start on Wilgespruit this year, and the community will reap the benefits of localising procurement and employment opportunities in the area.
“I am confident that these opportunities will be a catalyst for employment and wealth creation locally in addition to the procurement benefits once mining starts. Much of these funds will be channelled into social labour plans and business development initiatives. The local community definitely wants to reinvest this money to grow their output and productivity,” says Clarke.
He admits that the increasing demand from local communities regarding employment and procurement has required a specific focus. Clarke is proud that more than 60% of Sedibelo’s employees are local – many of whom are women. The desire for cooperation can be seen in the frequent interaction and open communication at all levels of the organisation with the leaders and members of its host communities.
Sedibelo has a firm commitment to sustainability. This includes firm steps taken to lessen its environmental footprint. This principle is fundamental to all Sedibelo’s decision-making.
“We vigorously monitor our pollution levels, including waste management and water use, as to not negatively impact on our environment in any way,” affirms Clarke.
Sedibelo engages with employees, stakeholders and shareholders with a spirt of mutual care, respect and honesty.
“We are a solid, stable, disciplined, yet passionate, team, with our senior members having been at the mine for an average of ten years, which is most of its operating life. In addition, programmes are in place to develop the next generation of senior managers, of which the majority are local residents, benefitting from Sedibelo’s skill development programmes.
“We believe in the upliftment of our communities and see this as fundamental for achieving a better future for all stakeholders. This can only be achieved through caring for people and being respectful and honest and is reflected in how well we engage with roleplayers and representatives. You are not always going to agree, but mutual respect goes a long way to resolving issues,” stresses Clarke.
Sedibelo’s decisions are geared towards being a sustainable and responsible corporate citizen, as it actively aims to leave behind a sustainable legacy for the community in which it operates.