Rising demand and uncertainty over Russian supplies are evoking primary producers of platinum group metals to expand production at an unprecedented rate.
Plagued by archaic technology and having only low-grade ore left to mine, Russian miner Noril’sk must spend US$3-5 billion over the next 10 years to modernize its operations and keep production steady. The mining behemoth accounts for about two-thirds of the world’s palladium and one-fifth of its platinum (and nickel) production.
But whether Noril’sk, a notoriously secret organization, will succeed in its modernization plans is questionable. The sheer sum involved and the company’s undoubtedly enormous environmental liabilities are sure to keep international investors at bay.
Add record demand to that uncertainty and you have a situation no miner can resist. Accordingly, primary producers on both sides of the Atlantic are heeding the call.
By 2003,
The South African major believes platinum demand will rise by 3% annually in the foreseeable future, slightly less than the average 5.1% seen over the past decade. Fueling that growth will be higher consumption in the jewelry and industrial sectors, plus greater use in catalytic converters, which are required to control hydrocarbon emissions in vehicle exhaust, an increasing concern of environmentally conscious governments.
In response, Amplats has opened the Bafokeng Rasimone mine and will open the Maandagshoek mine in 2004. The former is working open-pit reserves as underground development continues. Full production is slated for 2002, at the annual rate of 250,000 oz. platinum.
Also, the company is ramping up production at the Amandelbult and Lebowa underground mines, to be followed by similar expansions at projects elsewhere in the Bushveld. Accordingly, milling capacity is being expanded at the Rustenburg plant to accommodate the extra feed.
Amplats is the world’s largest platinum producer, having cranked out a record 2 million oz. in 1999, plus a record 1 million oz. palladium. Like all South African miners, it also churns out proportional but significant quantities of other platinum group metals (PGMs), gold and base metals.
Amplats, as well as other South Africans, focuses on the Merensky and UG2 reefs of the Bushveld igneous complex. Combined, the reefs host some 90% of the world’s known PGM reserves and account for 80% of platinum and 20% of palladium production.
(The reserves of Noril’sk are a state secret, though the company’s web site reports having a 50-year supply. However, the rich massive sulphide ore to which Noril’sk owes its success is nearly depleted and consequently is being replaced by lower-grade feed.)
Messina
Smaller but no less determined,
The strategy has already seen refining contracts inked with Australian-listed
Impala developed Messina in the late 1980s, only to mothball it when rallying platinum prices reversed course in the early 1990s. A recently tabled feasibility study suggests mining the Voorspoed section, one of two that have been developed.
Measured resources are pegged at 11.2 million tonnes grading 6.85 grams precious metals per tonne. This lies within a global resource of 21.2 million tonnes grading 6.85 grams precious metals.
Shaft de-watering, underground development and bulk testing are expected to begin by year-end. Eventually, 80,000 tonnes will be mined each month to produce high-and low-grade concentrates. The concentrates would then be shipped, in slurry form, to Impala’s smelter at Rustenburg.
Annual production is pegged at 159,000 oz. PGMs plus gold, of which 44% will be platinum and 34% palladium. Cash operating costs over the 17-year mine life are expected to average US$154 per oz. precious metals.
Impala is also reopening the Crocodile River mine and jointly assessing with Aquarius the Marikana and Everest South projects. That partnership currently allows Impala to process all concentrates produced by Aquarius’s 45%-owned Kroondal Platinum mine, where full production at a rate of 100,000 oz. platinum, 54,000 oz. palladium and 17,000 oz. rhodium in concentrates has begun.
Crocodile River is slated for startup in 2001. The mine (also a victim of the early 1990s crash in platinum prices) is expected to churn out 50,000 oz. platinum and 30,000 oz. of other PGMs per year.
Impala’s drive is not restricted to expansion alone. The company took the unusual step earlier this year of joining a nickel laterite project in the Philippines in order to reduce by 3% overall PGM operating costs (R250 per oz., net of byproduct credits, in the final six months of 1999).
“Although the focus of Implats remains on PGMs, this project provides us with the opportunity to improve the one area of our business in which we are currently not competitive,” says Steve Kearney, Impala’s chief executive officer. “The increased throughput at Springs [South Africa], as a result of the refining of the Philippine metals, will enable us to achieve significant cost savings and drive us yet farther down the PGM cost curve.”
Resources at the Philippine project, dubbed Nanoc, stand at 130.6 million tonnes grading 1.1% nickel and 0.11% cobalt, sufficient to yield 41,000 tons of Class I nickel and 4,000 tons of high-purity cobalt annually over 40 years. Impala currently produces 15,000 tonnes of nickel from its own mines and tolling.
To earn a 25% stake, Impala must contribute US$6 million to a bankable feasibility study, followed by a one-time cash payment of US$75 million to the property owner. Once begun, the study is expected to take eight months to complete.
Lonmin
Lonmin has sold its coal division to fund a 25% increase in annual platinum output to 800,000 oz. The sale also strengthens the company’s reorganization as a pure precious metals producer, which began a year ago with a name change and split from Lonrho Africa.
Most of Lonmin’s increase in production will come by way of higher smelting and concentrating capacity. Accordingly, new underground headings are being developed in preparation for smelter commissioning in the coming months.
Lonmin is South Africa’s third-largest producer, having cranked out 625,000 oz. in 1999. Annual output is expected to top 700,000 by 2001, rising gradually thereafter to the desired amount.
Lonmin is owned 27.1% by Impala Platinum.
Northam Platinum
Northam recently replenished its reserves of Merensky ore by issuing 46 million shares to Amplats in exchange for certain mineral rights. The major has since bought another 15 million shares in the junior, which, in turn, has begun similar negotiations with Mvelaphanda Platinum, a consortium of South Africans involved in several black-empowerment initiatives.
In 1999, Northam cranked out 190,000 oz. platinum from 1.76 million tonnes of ore. This is anticipated to rise by 30% in 2001, owing to the combination of ore from the UG2 reef, which will be processed in a new concentrator to be built.
Northam now has sufficient reserves to maintain operations for 23 years.
All told, six new projects by various companies are under way in South Africa and several more are in the pipeline. If brought to fruition, another 1.2 million oz. platinum would be added to annual production, plus proportional but significant quantities of palladium and rhodium.
Record palladium demand
Rising palladium demand in recent years is causing North America’s two primary PGM producers to boost production at their respective mines. Unlike the South Africans, their operations are much richer in palladium than platinum.
In 1999, palladium consumption topped 9.37 million oz., marking an astonishing 174% increase since the decade’s start. Last year’s unusually high demand reflects hoarding by automobile manufacturers unnerved by erratic Russian exports. Nevertheless, the country satisfied 58% of 1999 consumption, down 400,000 oz. from the previous year, and 1.31 million oz. of total demand were covered by Western stockpiles, marking an unprecedented production deficit.
By 2002,
In 1999, Stillwater cranked out 409,000 oz. combined palladium and platinum from its namesake mine. More than 725,000 oz. of those combined metals are expected to be produced per year once the expansion project is complete, plus another 450,000-500,000 oz. annually from East Boulder.
Stillwater and East Boulder exploit the JM Reef of the Stillwater Intrusive complex. Like the Bushveld reefs, JM differs from magmatic sulphide deposits in that the PGMs are primary, not secondary products.
Reserves at Stillwater are pegged at 20.8 million tonnes grading 24 grams per tonne palladium and platinum, whereas those at East Boulder stand at 32.92 million tonnes grading 24 grams. Palladium typically accounts for 75% of the contained metals.
Meanwhile,
Unlike Stillwater, it ships its concentrates to an independent plant for further processing. In 1999, 64,441 oz. palladium in concentrate were shipped; however, the company was unable to turn a profit comparable to previous years (T.N.M., May 22/00).
At the expanded rate, scheduled for 2001, NAP expects to crank out 248,900 oz. palladium, 24,200 oz. platinum and 19,100 oz., plus copper, nickel and cobalt credits annually.
Meanwhile, the frenetic bustle of the producers continues to whet the appetite of the attention-starved junior market. Below is a brief summary of a few programs that recently got under way in northern Ontario, where most of the PGM exploration activity is focused.
The drill program follows a regional geophysical program and a 13-hole drill program, completed earlier this year. Results from the final holes of that program were recently released. Highlights include:
hole 8, which cut 7.2 metres (from 17.1 to 24.3 metres) grading 2.41 grams palladium and 0.79 gram platinum per tonne, plus 0.16% copper and 0.02% nickel (farther down-hole, 28.6 metres — from 119 to 147.6 metres — averaged 1.52 grams palladium, 0.51 gram platinum, 0.17% copper and 0.03% nickel);
hole 9, which intersected 9 metres (68-72 metres) grading 3.49 grams palladium, 1.12 grams platinum, 0.32% copper and 0.04% nickel; and
hole 10, which returned 5.45 metres (92-97.45 metres) grading 4.25 grams palladium, 1.16 grams platinum, 0.47% copper and 0.08% nickel.
River Valley covers 43.5 sq. km of the 30-by-15-km, layered mafic intrusion after which it is named. The mineralization discovered so far is near the basal contact with country rock, in coarse hetrolithic breccia.
Project funding is provided by Amplats, which can earn a half-interest in River Valley and other select PFN properties by paying $300,000 and spending $4 million over four years. One-quarter of that is budgeted for 2000.
Funding for the program is being provided by Impala as part of its requirements to earn a 60% interest in the project. To earn its full stake, Impala must fund $6 million on exploration and pay $255,000 in cash over five years.
Also, Mustang raised $600,000 in a private placement to fund a 6,000-metre drill program at the East Bull Lake intrusion, 80 km west of Sudbury. Mustang owns claims covering about 90% of the intrusion.
In total, 800,000 units were issued at 75 apiece. A unit consists of a share and a purchase warrant, with a warrant entitling the holder to an additional share at $1 in the first year and $1.25 in the following six months.
Previous drilling at East Bull Lake intersected narrow intervals grading up to 5.65 grams platinum-palladium-gold.
Funding at Wolf Mountain is being provided by
Some of the proceeds are earmarked for the Tib Lake project, also near Thunder Bay. There, Houston is focusing on five induced-polarization anomalies outlined earlier this year. One of those anomalies is 2.5 km in size and coincides with most of the known showings of PGM.
The Kibler property lies 5 km east of the short-lived Thierry copper mine, which produced platinum and palladium as byproducts during its 2-year stint in the early 1980s. Fjordland recently staked 259 claims east and southwest of the mine to investigate electromagnetic conductors and two historic drill holes. The drill holes were not tested for platinum and palladium but yielded minor values of copper, nickel and silver.
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