With depressed platinum group metal (PGM) prices, there is plenty of scope for optimism and opportunity, it emerged at last month’s PGMs Industry Day in Johannesburg.
According to delegate Joseph Mainama, partner and principal mining engineer at SRK Consulting South Africa (SA), speakers at the event highlighted that streamlining of operations and costs remains a focus in this segment – and possibly some further consolidation of assets.
As a result of the current price pressure, major PGM projects being investigated are mainly for replacement rather than expansion of product supply, said Mainama. One of the feasibility studies mentioned was at Anglo American Platinum’s flagship Mogalakwena mine, with results expected in the middle of the year.
Price support to come
“The future outlook is more positive, however, as primary supply is expected to decline over the coming decade – with favourable impacts on the metals’ prices,” said Mainama. “Information shared at the PGMs Industry Day showed that the major producers have notional aggregated life-of-mine plans in excess of 200 years.”
Indeed, Impala Platinum CEO Nico Muller argued that the market for platinum, palladium, rhodium + gold (3E – the three key elements of PGMs) will be in deficit in 2025, which should offer major support for metal prices.
“It was also mentioned that there were no tariffs planned for PGMs, although this could change–,” said Mainama. “Metals Focus director of PGM research Wilma Swarts was bullish on palladium and rhodium, while S&P Global Commodity Insights senior mining analyst Jason Holden took a similar view on the supply of palladium.”
The conference’s panel on price forecasts confirmed that it would certainly be premature to call the PGM segment a dying industry, he pointed out. He noted that speakers had highlighted the need to strengthen market development initiatives, and to explore the opportunity to manage supply to fit demand.
Looking for value chain efficiencies
“There will have to be further cost curve improvements, and value chain efficiencies continue to be an area that the sector is pursuing to improve operational performance,” he said. “With mines’ high fixed costs, industry observers also see further consolidation as likely – to optimise overheads and operational costs. Economies of scale tend to offer the best chance of reducing unit costs.”
Another area of performance improvement discussed at the event, he noted, was further diversification of assets in the future. This was mentioned as a company strategy by both Sibanye Stillwater CEO designate Richard Stewart and by Muller.
“With the depletion of the Merensky Reef, there is an opportunity for PGM players to extract chrome from the upper group reef horizon (UG2),” said Mainama. “Investment in this direction offers an opportunity to diversify revenue streams for the assets.”
Opportunities in green hydrogen
Among other catalysts for investment is green hydrogen, leading South Africa’s trade and industry minister Parks Tau to hail the potential investment in the Boegoe Baai export terminal.
“Targeted export of green hydrogen is under investigation and the Japanese market is one of the many that are being explored,” said Mainama. “Financial support by the South African government is currently being considered for these projects. Further, green aviation fuel was also under investigation by SASOL.”
He noted that PGM projects of various sizes – and both greenfield and brownfields in nature – were being undertaken, with SRK being involved in all aspects from initial conceptual and feasibility studies through to closure and including facets such as risk assessments, value optimisation, tailings dam designs and project reviews.
“Among our contributions to PGM projects are operational support audits and assessment of compliance to governance requirements,” he explained. “There exercises identify potential risk factors but also identify potential areas of improvement.”
SRK also adds value to the sector through its work in public reporting and disclosure of the material issues impacting mining company’s assets. Mainama pointed out that this work supports mergers and acquisition transactions through interventions like mineral asset valuations and due diligence reviews.
