Tharisa plots strategy for growth and independence
Miner plans to unlock nearly full value on the platinum group metals it produces
Miner Tharisa aims to produce its own high-value platinum group metals (PGMs) within the next five years, unshackling itself from an offtake agreement and realising a 17 percentage point improvement in the prices it will receive.
Tharisa, which mines PGMs and chrome near Brits in North West, is testing its furnace technology to produce a PGM-rich iron alloy and will conduct further work on a hydrometallurgical process to generate a concentrate that will sell for 97% of the value of the metal it contains.
Existing offtake agreements with major producers like Anglo American Platinum, Impala Platinum and Lonmin — the only companies with smelting and refining plants in SA’s PGM industry — pay about 80% of the value of the metal to smaller companies.
Tharisa has made impressive inroads into SA’s chrome and PGM industries, rising to fourth and seventh-largest in just a few years from its single mine.
Now that it is on track to reach its 2020 goals of 2-million tons of chrome a year and 200,000oz of PGMs, a level at which it is likely to remain for the foreseeable future, Tharisa is looking for growth and independence, says CEO Phoevos Pouroulis.
One of those strategies is to build a 5MW furnace and a hydrometallurgical plant that will treat all its PGMs to create a high-grade concentrate to feed into refineries once the offtake agreement with Impala Platinum expires in four years, he said.
The key driver of the strategy is to extract the best possible value from its PGM production. Tharisa is working with Lonmin on these ideas.
Tharisa is also investing in exploration of two prospects in Zimbabwe, with an alluvial chrome deposit the most likely to come into production within the next 18 months. The high-grade chrome would fetch a premium of about $70/ton over SA’s metallurgical chrome, Pouroulis said.
One of the strategies to lower costs for its chrome production was a railway siding near to its mine instead of trucking chrome concentrate to the Marikana siding.
While talks with Transnet has changed in tenor with a more commercial tone adopted by the rail parastatal, there was still a long way to go before agreement was reached, said Tharisa chief financial officer Michael Jones.
The proposal from Transnet that the tariff it charged Tharisa to use the siding would cover the R230m cost plus extras was rejected by the Johannesburg and London-listed company. Fresh attempts at securing an agreement that made commercial sense to the two parties were under way, Jones said.
About 98% of Tharisa’s chrome is moved by rail.
Tharisa reported strong operational results for the year to end-September and declared a total dividend of $0.04 a share for its 2018 financial year.
Improved production of chrome and PGMs offset a decline in the price of metallurgical chrome. The benefit from a higher PGM price resulted in revenue rising to $406m in the year to end-September from $349m in the previous year.
Chrome sales made up $250m of revenue and PGMs $117m.