The first material from Northam Platinum’s recycling business in the US arrived in Durban a few days ago, marking the start of a careful foray into an increasingly important aspect of the global platinum market.
Northam CEO Paul Dunne is at pains to point out this was a "trial shipment" of recycled platinum group metals (PGMs) from the A-1 Specialised Services it bought out of a liquidation process in the US during 2017.
Northam has stated its ambition to grow the largely mothballed business in Pennsylvania to 50,000oz of PGMs a year within 18 months and the first shipment was an indication it has gingerly started on this path.
Dunne declined to say how many ounces of PGMs were in the first shipment, which will be processed at the smelting complex near its Zondereinde mine near Thabazimbi.
Asked about the need for an injection of capital into the business, Dunne said the plant and infrastructure in Pennsylvania did not need any investment but the business would need working capital.
The recycling business has three essential elements. There are the scrap merchants collecting the boxes on exhausts that contain platinum, palladium or rhodium in autocatalytic converters to scrub out noxious gases and pollutants.
They sell this material to collectors, who have extensive networks to buy and consolidate it before selling it to smelting companies.
The working capital Dunne refers to is the value chain between collectors and scrap merchants who work on a cash basis. The trick for the smelting company is to manage the cash flow against the time it takes to process the material and deliver a finished metal to a buyer, something that Dunne says is a trade secret.
Northam wants to use its existing relationships with Germany’s Heraeus and chemical company BASF to secure recycled material.
Sibanye-Stillwater, which bought Montana-based Stillwater Mining for $2.2bn, has acquired a recycling business in the US as part of the American company’s assets and this is an important aspect of its output in the US.
In 2017, recycling contributed 1.9-million ounces towards 8-million ounces of platinum supply, with the recycling of autocatalysts generating 1.34-million ounces. In the palladium market, recyclers account for 2.9-million ounces of metal versus 6.6-million ounces of mined supply.