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Ensuring cost-competitive operational performance and increasing efficiencies and outputs to improve margins were cited as being key by new African Rainbow Minerals (ARM) CEO Phillip Tobias when he outlined the operating, low price, logistics, power, water and above-inflation cost challenges of ARM's 2023 financial year to June 30.

"A cost focus is very key," Tobias emphasised when the Johannesburg Stock Exchange-listed company reported 21% lower headline earnings to R8 981-million on September 4.

"Very important is to continue engagement with Transnet to implement sustainable logistics solutions that are value accretive to all stakeholders," he said.

The South African diversified company, headed by Dr Patrice Motsepe, which mines iron-ore, manganese ore, chrome ore, platinum group metals (PGMs) and coal, also has a strategic investment in gold through Harmony Gold. ARM's ferrous metals interests are held through wholly owned ARM Ferrous which owns 50% of Assmang.

Implementation of technology to enhance productivity and efficiencies, looking for appropriate new technology and employing it to deliver better volumes, were highlighted, along with delivering existing growth projects on time and on budget. Applying what went well with the successful R7.4-billion Black Rock project as well as the associated skillsets to projects under way, such as the Two Rivers Merensky project and front-end loading for the Bokoni platinum group metals (PGMs) project, is key. ARM is intent on transitioning Bokoni into execution mode and delivering it on time and on budget.

As an immediate area of attention, improvements are being driven by enhanced levels of mechanisation and automation, and appropriate new technology and fit-for-purpose information technology systems.

"Very important is to control things that are within our control, especially in the PGMs space, and ensuring that we improve our grades close to reserve grade and reduce waste and dilution. It's an area that's getting our urgent attention," said Tobias during the presentation covered by Mining Weekly.

"A lot can be mentioned about where we are positioned following the drop in iron-ore and manganese prices, together with reduced sales volume, especially in the ferrous space.

"If you look at iron-ore, the installed capacity is around 16-million tons and we only delivered 13.2-million tons.

"On the manganese side, Black Rock and Gloria mines have been capacitated to deliver between 4.3-million tons and 4.6-million tons. But the operations have been constrained in this last year by the logistics challenges that we've faced, on rail and at port levels.

"Management is continuing to work closely with Transnet to improve the situation and we do believe that we will certainly be able to land at some of the long-term sustainable solutions.

"In terms of the manganese alloys, we've experienced the high records that have been delivered by Sakura Ferroalloys.

"On the PGMs side, though there were increased tonnages from Two Rivers and Modikwa, what really challenged us was grade and to that extent, we're looking at making sure that we optimise mining and reduce waste dilution.

"We have strong Ebitda margins in iron-ore, coal and PGMs, even through there has been a regression in PGMs from a 55% Ebitda margin to 42%. Those three commodities are still delivering on over 40%. However, manganese ore and manganese alloys have been challenged, with manganese ore consistent year-on-year.

"Khumani remains a tier-one iron-ore asset with more than 20 years of life. It has high-grade and low-strip ratios.

"But for the first time, this year we sold less than 12-million tons, a number never seen in the past ten years.

"That really tells you the extent of the challenge that we are facing emanating from the Transnet employee strike that lasted close to ten days, and after those derailments and unavailability of locomotives. Through ...

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The partnership of South Africa's mining industry and State-owned rail enterprise Transnet must translate into "results, results, results", African Rainbow Minerals executive chairperson Dr Patrice Motsepe emphasised at the diversified mining company's presentation of 2023 financial results.

On the operational front, iron-ore, manganese ore and thermal coal volumes were negatively impacted by logistics challenges in the 12 months to June 30, Johannesburg Stock Exchange-listed ARM reported on September 4.

"For us in the private sector, the principle of employing the best skills and expertise, the best people for the job, is non-negotiable, absolutely non-negotiable," Motsepe said, in drawing attention to the private sector employing young black, coloured, Indian and white South Africans to occupy senior positions, "not because they are black or coloured or Indian or white, but because they are the best for the job".

"We can't be experimenting. There's no time to be playing around and fidgeting and saying your experience is questionable, but you're smart and bright, and then you put a smart and bright person in a leadership position which requires five, seven and sometime ten years of practical experience that the smart and bright person does not have. The best people in any industry are the ones who have grown up in the business and understand the business," said Motsepe.

"Whether you're at Transnet or Eskom or African Rainbow Minerals, it's not the good ideas or even the good plans or the wonderful restructuring, or the new management that you put in place. That's important but what's more important are results, results, results.. The partnership with the mining industry and Transnet must translate into results.

"We need to work together, that's why we have to continue to build the trust . . . we should never really be having problems as a country in having enough trains timeously.

"You'll see that part of our volumes are down because the partnership with Transnet, which is something that's important to us, can do much better, not just for African Rainbow Minerals, but for all of the mining companies that use Transnet," added Motsepe.

In response to Umthombo Wealth analyst Sandile Magagula on what was informing ARM's higher 2024 iron-ore export volume guidance from 12-million tonnes to 13.2-million tonnes, ARM Ferrous CE Andre Joubert pointed out the issues that influenced the higher guidance as being a combination of Transnet having a worker strike the previous year, followed by a very slow ramp-up back to production, which was included in the poor performance of Transnet, along with the moving of the Transnet allocation from the Beeshoek iron-ore mine to the Khumani iron-ore mine. There was a 350 000 t/y rail allocation to Beeshoek but with wagon capacities of only 65 t.

"Now, we've diverted those trains to Khumani mine at 100 t per wagon, so just that gives us almost 200 000 t a year extra. Then also, with deep engagement and involvement with Transnet and the iron-ore producers, we participated in the planning for the shutdown and in the tamping process to restore and level the track.

"We assisted Transnet in getting that tamping machine in place. Now, in October, we're going to go for a ten-day shutdown and during that shutdown, there's going to be a lot of work done and we're assisting and working with Transnet in terms of that planning.

"The outcome of that is an objective that we have, which is to fix the areas where there's speed restrictions due to the condition of the rail and the sleeper network and lift the majority of those speed restrictions, which will improve the overall cycle time."

The plan that Transnet has is to increase the current 35 iron-ore train slots per week to 38 train slots per week. This is based on real planning and these are the elements that are going to give us that improved performance from our partners in Tra...

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Ground works and civil works are reportedly progressing well for the installation of a dense medium separation (DMS) magnetite plant in South Africa's Bushveld Complex.

The plant is expected to be installed in around four weeks, with first sales set to follow four to six weeks thereafter.

The DMS magnetite project is described by Ironveld CEO Martin Eales as being beneficial for its Ironveld Mining subsidiary in terms of reducing overall average mining costs and, in time, likely contributing positive cashflow, without the London Aim-quoted company having to divert funding from its core smelting activities.

Ironveld, which holds mining rights over 28 km of outcropping Bushveld magnetite with a compliant ore resource of 56-million tons of ore, last year agreed to acquire and refurbish a Rustenburg smelter to process its magnetite ore into high-purity iron, titanium slag and vanadium slag.

"Sable is really pleased to be partnering with IPace in this exciting project that we believe will generate good cashflow for all the parties and provide a base for further developments," Sable Exploration and Mining CEO James Allan stated in a Stock Exchange News Service announcement.

Ironveld Mining and joint venture (JV) partner Pace agreed funding and operational structure amendments to the DMS magnetite operation with a subsidiary of JSE-listed Sable Exploration and Mining.

The new structure retains Ironveld's ability to supply ore into the JV and benefit from a share of positive cashflows without having to fund the initial capital expenditure.

The JV is responsible for erecting, operating and maintaining the plant alongside marketing of the final product, while Ironveld Mining will continue to supply ore on a cost-plus basis to IPace.

Sable Exploration and Mining, through subsidiary Sable Platinum Holdings, will advance R15-million for the establishment of an initial quick start of the plant, which will have a capacity of 10 000 t a month. There will also be an option to fund future expansions in capacity, depending on the success of the venture.

Sable Platinum Holdings and IPace have agreed that investment in a larger plant will be considered once the proposed plant has reached full capacity.

Mining Weekly Editor Martin Creamer unpacks this week's biggest news. Northam paid R2.4-billion in dividends and highlighted its business risks ahead; Vedanta Zinc is looking to invest $500-million as soon as rail and energy issues are overcome; and there are plans for lower carbon electricity supply for Hillside Aluminium.

Although JSE-listed Impala Platinum battled to take over its now acquired subsidiary Royal Bafokeng Platinum (RBPlat), much work is now needed to optimise the operations and get costs down, following double-digit cost increases for the business over the last year.

CEO Nico Muller explained during a media briefing on August 31 that RBPlat would require "dedicated attention" to extract the quality resource that it offers.

RBPlat is a mid-sized platinum group metals (PGMs) producer with mining and concentrating operations contiguous to the Impala Rustenburg portfolio on the western limb of the Bushveld Igneous Complex in South Africa.

The business is premised on shallow, low-cost and mechanised operations; however, what has transpired are constraints in processing throughput and recovery, notably at the Styldrift smelter.

The Styldrift site is one of the last known high-grade blocks of shallow Merensky reef deposits. The current Merensky and upper group two resources support a life-of-mine in excess of 40 years.

Implats' near-term focus at RBPlat is to optimise costs, improve metallurgical performance, complete a ramp-up at Styldrift, and plan and implement medium- and longer-term initiatives to realise the synergies provided by the acquisition.

In the second half of 2015, RBPlat made the strategic decision to defer ramp-up at Styldrift, owing to low PGM prices at the time. However, towards the latter half of 2016, the progress made at Styldrift, as well as basket price increases, allowed RBPlat to commit to the next phase of expansion, which ramped up the mine to 150 000 t a month. This milestone was achieved in October 2018.

At steady-state Styldrift can produce 320 000 oz/y of platinum, palladium, rhodium and gold (4E).

Factors affecting Styldrift's performance over the last year include a lengthy Section 54 stoppage following a fatality, as well as poor productivity.

RBPlat's cash cost per 4E ounce increased by 22% in 2022, resulting from inflation and lower production volumes at Styldrift.

Muller explains that the delay in finalising the RBPlat transaction, since Implats first offered to buy out all shares it did not own at the end of 2021, contributed to uncertainty and lower productivity.

Implats launched the acquisition of RBPlat in November 2021, with an offer of R90 in cash and 0.3 Implats shares per RBPlat share. Rival Northam Platinum also tried to take over RBPlat with an offer of R172 apiece, but subsequently pulled the offer and sold its shares in RBPlat citing PGM price considerations.

"There are fundamental technical weaknesses at the moment at both the processing plant, and particularly the new plant, Maseve, which never got going," Muller notes.

The Maseve concentrator plant is northwest of the Bafokeng Rasimone Platinum Mine's South shaft and to the south of Styldrift. The concentrator was upgraded to a capacity of 180 000 t a month in 2022, to process ores from the South shaft and Styldrift.

Muller adds that Implats will need to technically reorganise the way in which RBPlat is managed, especially with regard to preventive maintenance, spares sourcing and inventory management.

The fact that RBPlat is now incorporated into a larger company, which has a vast concentrator capacity and typical recoveries of 89%, bodes well for RBPlat's future. RBPlat's operations currently have a recovery rate of 80%.

"I have no doubt the technical expertise of Implats will be able to restore recovery at RBPlat," Muller states, adding that an optimised RBPlat and its assets will provide flexibility for the group, as well as an opportunity to drive down costs at group level.

Muller anticipates an optimisation of RBPlat's operations will take between 12 and 24 months.

Commenting on plans for a Styldrift II operation, Muller says the size, grade and shallow depth of the mineral resource characteristics of Styldrift II represent a significant investment opportunity of R20-billion, which Implats will only pursue later on.

The curre...

Impala Platinum (Implats) CEO Nico Muller says platinum group metal (PGM) market fundamentals are stronger than what current pricing suggests.

He also does not expect there to be further significant price declines.

Reflecting on the company's results for the financial year ended June 30, Muller says the company had anticipated a fall in PGM prices - "admittedly it happened much faster than originally expected".

He adds that the current prices are "not bad" compared with the last 15 years, particularly as 2021 and 2022 had record price spikes.

Implats declared a 63% lower dividend at R5.85 for the financial year, on the back of lower PGM prices.

This compares with the dividend of R15.75 it paid out in the prior financial year, when it reported a stellar R53-billion in earnings before interest, taxes, depreciation and amortisation (Ebitda).

The group posted a 32% year-on-year decline in Ebitda to R36-billion for the financial year under review.

Implats' profit for the year amounted to R6.1-billion, marking an 81% decrease on the prior year's profit of R33.1-billion.

Headline earnings per share (HEPS) came to R22.11 in the reporting period, which marks a 42% decline on the HEPS of R38.53 for the 2022 financial year.

Gross refined production of 2.9-million ounces compares with the 3.08-million ounces produced in the prior year.

Tonnes milled from the group's managed operations increased by 7% year-on-year to 23.8-million tonnes, with higher reported volumes at Impala Rustenburg, Zimplats and Impala Canada, together with a consolidated contribution of 403 000 t from its newly acquired Royal Bafokeng Platinum (RBPlat) subsidiary, which all offset lower throughput at Marula.

Platinum, palladium, rhodium, iridium, ruthenium and osmium (6E) production at managed operations increased by 6% to 2.42-million ounces, and a maiden contribution of 43 000 oz in concentrate from RBPlat was recorded for the month of June. 6E concentrate production of 541 000 oz from joint venture operations was 1% lower year-on-year.

Implats realised an average platinum price of $962/oz in the year under review, an average palladium price of $1 763/oz and an average rhodium price of $11 696/oz, compared with prices of $1 008/oz, $2 211/oz and $16 544/oz for the three metals, respectively, in the prior year.

The group's production was somewhat constrained owing to smelting capacity being unavailable during the scheduled rebuild of the Number 4 furnace in Rustenburg. The company also experienced load curtailment in the period, ending the year with about 245 000 oz of excess inventory.

Muller says the financial year was challenging amid widespread power shortages, softening prices, rand depreciation and persistent inflation.

Notable rand depreciation compounded the impact of high consumable and utilities inflation on the translated cost and capital expenditure (capex) at the group's Zimbabwean and Canadian operations.

Total cash operating costs increased by 19% year-on-year, while unit costs benefitted from higher throughput at managed operations and, despite lower refined output, increased by 14% to R19 834/6E oz, compared with a unit cost of R17 364/6E oz in the prior year.

Capex at managed operations rose by 27% to R11.5-billion, compared with capex of R9.1-billion in the prior year, as spending on replacement and growth projects accelerated and the rand weakened against the dollar.

Implats' stay-in-business spend of R7.3-billion, replacement capital of R2.3-billion and expansion capital of R1.9-billion increased by 16%, 61% and 41%, respectively, in the year under review, compared with the prior year.

The group's financial performance was ultimately negatively impacted on by the retracement in rand PGMs pricing, lower refined production and sales, continued high levels of inflation and the accounting impact of end-of-period inventory valuations and impairments related to Impala Canada and RBPlat, as required by its consolidation.

Implats accounted for three ...

Gold miner Harmony Gold has posted a 46% increase in production profit to just under R14-billion, or $774-million, for the financial year ended June 30.

The company swung from a net loss of R1-billion in the 2022 financial year to a net profit of R4.8-billion in the reporting year, enabling it to declare a final dividend of 75c, or $0.04, apiece, against a prior full-year dividend of 22c, or $0.01, apiece.

Earnings a share increased by more than 500% to R7.80, or $0.44, from a comparative loss a share of R1.72, or $0.08, in the prior year.

In turn, headline earnings per share (HEPS) increased by 60% year-on-year to R8, or $0.45, compared with HEPS of R4.99, or $0.33, in the prior year.

Harmony met its full-year production, grade and cost guidance, having recorded an 8% increase in underground recovered grades to 5.78 g/t from 5.37 g/t in the prior year.

Gold production of 1.46-million ounces in the year under review compares with the 1.48-million ounces produced in the prior year, despite the Bambanani operation having closed at the end of the 2022 financial year.

Production was mainly driven by a solid operating performance at the South African underground mines and an 18% year-on-year increase in production from the Hidden Valley mine, in Papua New Guinea.

Harmony reported a 108% year-on-year increase in group operating free cash flow to just over R6-billion, from R2.9-billion of free cash flow generated in the prior year.

The company's cash generation was supported by a 15% higher average gold price realised in the reporting year of $1 829/oz.

The group managed to reduce its net debt-to-earnings ratio to 0.2 times, compared with 0.6 times as at December 31, 2022.

"The past financial year was filled with many highlights as Harmony delivered on its strategic objectives of producing safe, profitable ounces through operational excellence and value-accretive acquisitions.

"We saw an improved safety performance, while meeting our production, cost and grade guidance as we continue navigating a challenging operating landscape," CEO Peter Steenkamp explains.

He adds that it is worth noting that the company's costs have remained under control despite the current high inflationary environment.

Steenkamp says continued embedded sustainability practices, improved asset quality and operational consistency resulted in a strong and sustainable group performance with solid operational free cash flows in the year under review.

The company plans to allocate growth capital towards high-margin, long-life operating assets in the copper space, including by progressing its two key projects Eva Copper, in Australia, and Wafi-Golpu, in Papua New Guinea.

At the Eva project, Harmony is progressing a feasibility study following its acquisition of the project in December last year, while Harmony is progressing towards permitting of the Wafi-Golpi project.

Copper now comprises about 20% of groupwide mineral resources.

Harmony will also allocate capital to projects aimed at achieving net-zero emissions by 2045, including by investing in more renewable energy and reducing energy consumption through various energy efficiency programmes.

Harmony saved about R394-million in electricity costs in the reporting year, owing to 41 energy optimisation programmes having been implemented to save 295 GWh.

Harmony has saved a cumulative R1.7-billion in electricity costs since 2016, on the back of more than 240 energy efficiency projects.

Phase 1 of Harmony's renewable energy programme was commissioned in the reporting year, delivering 30 MW of solar generation capacity to its Free State operations, in South Africa, which will reduce the operations' daytime grid demand by about 20%.

Phase 2 of the renewable energy programme is in progress, which will add a further 137 MW of renewable energy generation to the portfolio. Harmony expects completion of this phase in the 2025 financial year.

The first 100 MW will largely be funded using a R1.5-billion green loan that Harm...

Globally diversified Indian-headquartered mining company Vedanta Resources chairperson Anil Agarwal has told Mining Weekly that the company aims to complete its commitment to invest $1-billion in South Africa in the near future, although its plans are being held up by a lack of reliable infrastructure and energy security.

Vedanta has already invested significantly in zinc mining in South Africa.

Agarwal revealed that Vedanta's investment journey in South Africa was prompted by Indian Prime Minister Narendra Modi's sentimental attachment to the region, as it holds significance as the starting point of pacifist Mahatma Gandhi's freedom-fighting movement.

In 2018, during a visit with the Prime Minister, Agarwal committed to investing $1-billion in South Africa, with the aim of creating a substantial number of jobs.

Highlighting their progress, Agarwal said Vedanta had already invested $500-million in the Gamsberg zinc mine, in which Vedanta holds 69.6%, while Exxaro Resources owns 24.4% and an employee stock ownership plan 6%.

This project has infused capital and brought job opportunities to an area previously devoid of significant employment prospects. Through collaborative efforts with the South African government, Vedanta has initiated the development of an industrial hub, leveraging the region's natural and human resources.

"We are going to invest another $500-million for a smelter and making the final product. The government has been working with us, creating an industrial hub in that area because they have human resources and natural resources," Agarwal said.

He said that, although Vedanta wanted to make the additional $500-million investment as quickly as possible, the timing was dependent on the availability of the necessary infrastructure.

"If I know that infrastructure is going to be provided now and it will be available, I can tell you that I can have $500-million to be invested within 12 to 18 months. But it all depends on the power supply and the railroad," he explained.

The company's commitment to social responsibility is showcased through its employment of 3 000 individuals, with plans to add another 2 000 jobs upon the completion of a smelter, bringing its total investment to $1-billion.

However, Agarwal identified two critical challenges that needed to be addressed for the successful realisation of these plans: power security and infrastructure development.

He underscored the significance of a consistent power supply for industrial operations and hinted at Vedanta's interest in renewable energy sources such as solar and wind. Agarwal lauded South Africa's potential for renewable power generation and alluded to Vedanta's ongoing exploration of these avenues.

"Renewable power has a big potential in South Africa, not only solar but wind as well. We have seen that the velocity of the wind is quite favorable. So we are working on it," he said, noting Vedanta's record as one of the leading renewable power producers.

He added that State-owned power utility Eskom would only improve if it were to be privatised.

"Eskom can be privatised. Trust me, it has huge potential. At least 50% to 100% more power can be generated. The government should consider that, and speed is very important because people are suffering," Agarwal said.

He acknowledged that collaboration between the private and public sectors was essential to overcome infrastructure constraints. He expressed optimism about the prospects of South Africa as an investment destination, citing Vedanta's previous commitment to keeping major companies rooted in the region.

"I have a feeling that now zinc and the metal downstream have huge potential in South Africa - galvanising, pharmaceuticals, chemicals - all these are required all around the world, and South Africa can be an attractive place to produce this as it is a land of entrepreneurs," Agarwal said.

Think tank the Mapungubwe Institute for Strategic Reflection (Mistra) has reiterated its call for the formation of a Platinum Group Metals (PGMs) Exchange in South Africa, given that many stakeholders are losing out on value that could have been created in a less volatile market system.

The organisation on August 28 convened a dialogue between stakeholders including the South African Reserve Bank, trade unions, platinum producers and the Department of Mineral Resources and Energy, to iron out some of the concerns around the practicality of such an exchange.

Mistra in 2013 set out to investigate the desirability of a PGMs Exchange in the country, particularly with the rise of the global hydrogen economy and platinum being a key commodity to this value chain as well as that of other emerging green energy technologies.

The International Energy Agency's statistics show that demand for hydrogen has grown more than threefold since 1975, reaching 95-million tonnes in 2022. The World Bank valued the hydrogen market at $130-billion in 2021, and estimates that it will grow by up to 9.2% a year to 2030.

Hydrogen is essential to decarbonise sectors where emissions are hard to abate, including aviation, maritime and high-heat manufacturing.

International registrar and classification body DNV forecasts global investment in producing hydrogen for energy purposes from now until 2050 will be $6.7-trillion, with an additional $180-billion poised to be spent on hydrogen pipelines and $530-billion to be spent on building and operating ammonia terminals.

Given the massive concentration of PGM endowments in South Africa and other Southern African countries for that matter, with South Africa holding 70% of the world's PGMs reserves, Mistra, the JSE and financial services firm Pan-African Investment and Research Services (Pairs) deems it prudent to extract the maximum value from this national resource.

During the dialogue, Mistra executive director Joel Netshitenzhe emphasised that South Africa must carve its rightful place in the global PGMs value chain, and not do future generations a disservice by not leveraging this unique opportunity.

He said a PGMs Exchange could unlock financial and marketing services development, human resource benefits and, most importantly, price discovery benefits.

Apprehensions have been raised, however, with regard to the ability to implement a PGMs Exchange, given that it would be a voluntary initiative for PGM producers. There are also the technical matters involved, including whether the implementation of an exchange should be conducted in a phased approach or not.

Essentially, Pairs head Dr Iraj Abedian noted, a PGMs Exchange would create a platform for exchange of capital between those who have it and those who need it, as well as introduce a new mechanism for price discovery, lest the commodity's pricing continue to be determined by a select group of stakeholders in London, which are not part of the South African PGMs value chain, as has been the case with the PGMs market for decades.

The establishment of a commodity exchange is an example of a strategic industrial policy intervention, which creates a marketplace to facilitate the exchange of mineral commodities and related derivatives.

Effective price discovery is important for PGM producers and beneficiators to extract the maximum value from this asset, to which an exchange can be a reliable mechanism, Abedian pointed out.

He highlighted that market prices were currently being manipulated and abused, in a process that contributed to value being lost for mineworkers, government and the industry in general, since PGM producers are highly vulnerable to market volatility.

Price discovery results from the rules-based interaction among market participants, including buyers and sellers, for the exchange of a commodity. During this interaction, process information reflecting supply and demand fundamentals is revealed by the market participants, which facilitates the d...

The current platinum group metals (PGMs) basket price puts 70% of the South African production base at a loss when taking into account replacement capital requirements on top of the working costs.

A final gross cash dividend of R2.4-billion from income reserves has been declared.

"The industry at this price is in a very substantial squeeze and pretty precarious position should prices not recover," Northam CEO Paul Dunne said during the company's results presentation for the 12 months to June 30. (Also watch attached Creamer Media video.)

Northam will be conservative in this market in terms of what it will do from the current position.

"We need to be inwardly focused rather than outwardly focused in this market. This market has changed very significantly over the course of the last 12 months. We are cautious about the forward market condition and we'll behave appropriately on that basis," said Dunne.

A contraction in the three main metals of platinum, palladium and rhodium over the coming two decades is forecast

"If we overlay the current economic headwinds on the natural depletion profile, we can reasonably expect earlier closure of marginal mines and the potential to delay projects.

"This will potentially lead to a dramatic contraction in mine supply should current prices prevail," said Dunne during the presentation covered by Mining Weekly.

If palladium prices remain as they are, the Johannesburg Stock Exchange-listed PGM mining company expects significant pressure on supply and the potential for not insubstantial decline from 2025.

The mainstay of production for rhodium is upper group two reef on the western limb of the Bushveld Complex, where operations are amongst the oldest and highest cost in the industry.

"They are vulnerable to a low price environment. We anticipate lower production into the future even if rhodium prices recover somewhat.

"Supply of PGMs will become increasingly constrained and if the world truly needs these critical and strategic metals, then the markets must incentivise additional supply from here.

If this is not the case, the world's primary PGMs production base will rapidly shrink," Dunne forecast.

A fall in the average price received from over R80 000 per platinum ounce to R67 000 per platinum ounce is expected amid a combination of global inflation and consequential rising interest rates, together with Russian metal flows into the Chinese market and automotive original equipment manufacturers destocking.

Prices declined further after Northam's June 30 financial year end and today's spot for Northam offers around R53 000 per platinum ounce.

In addition, the fibreglass industry has liquidated rhodium into an already soft market, leading to a fairly extreme price reduction and subsequent negative impact on the basket.

"This depressed price environment may last for some time in our opinion and we will act accordingly, maintaining focus on operational performance and productivity, cost control and prudent management of the balance sheet and liquidity position.

"Current pricing will place great stress on the sector and Northam maintaining its position in the lower quartile of sector cost curve is a business imperative," Dunne said.

To manage what could be a difficult period, Northam's focus will be on safe production, continued project execution and efficient mining at the right cost.

Northam is forecasting a production of 850 000 oz to 880 000 oz in its current financial year to the end of June next year, at units cost of R40 000/oz to R42 000/oz on inflation experience.

Sales will be higher than production in the range of 950 000 oz to 990 000 oz including material from third parties.

Capital expenditure of R4.5-billion to R4.8-billion allows for continued development of Northam's Eland PGMs mine, as well as provision for the renewable energy programme.

Growth from the Booysendal and Zondereinde mine over the next few years, together with the progressive ramp-up of Eland, which will deliver into ...