PLATINUM GROUP METALS

A century's worth of platinum still to be had in SA - Johnson Matthey

A curious reminder that South Africa can mine platinum for more than a century at a time when prices are picking up and miners are still grappling with a few issues

Author: Barry Sergeant
Posted: Thursday , 21 Oct 2010

JOHANNESBURG  - 

London-based Johnson Matthey, a specialty metals and chemicals group, has published a report it commissioned, with the startling conclusion that "platinum group metals are prevalent enough to meet demand for many years to come". The report itself, authored by Grant Cawthorn, a professor in the School of Geosciences, University of the Witwatersrand, Johannesburg, finds that for each one kilometer of depth into the earth in the Bushveld Complex (South Africa), "there is in the order" of 350m ounces of platinum.

Curious as this turn of phrase be, the professor says that "for comparison, annual production of platinum from the Bushveld Complex currently is only" around 5m ounces a year.

The latter notion is far easier to grapple with; Anglo Platinum, the world's biggest miner of platinum group metals (PGMs) in 2009 produced refined metal to the tune of 2.5m ounces of platinum, 1.4m ounces of palladium, 350,000 ounces of rhodium, and 91,000 ounces of gold. The four metals are known as the "4E" elements in PGM ores; there are a good number of others, including osmium and nickel.

The professor remarks that "the remarkably disproportionate concentration of the PGE [platinum, palladium, rhodium, iridium, osmium and ruthenium] in one geographic location, South Africa, is genuine. Even with current mining methods, technology and prices, there are many decades to a century of extractable PGE ore already known in the Bushveld Complex".

As mentioned, Anglo Platinum produced 4.8m ounces of PGMs in 2009, from a base of reserves and resources running into hundreds of millions of ounces of metal still sitting in the ground. The abundance of these metals has been known for decades, if not quite from when PGMs were first officially discovered in 1925.

Based on its latest ore statements, based in turn on rigorous definitions, Anglo Platinum holds 170.5m ounces of PGMs in reserves, the strictest classification of a mining company's unmined mineral inventory. If that were not enough, Anglo Platinum holds a further 632.3m ounces of PGMs in the resources category.

Mined at the rate seen in 2009, Anglo Platinum's in-ground inventory is good for another 167 years. The group has other ground with resources not yet measured to the strict standards applied to those mentioned, but that hardly seems necessary on such an astonishing existing life-of-mine.

Professor Cawthorn, along with Johnson Matthey, should look forward to some good sleep tonight, having reminded the world that South Africa has PGMs coming out of its ears, but yet to emerge from the ground. Johnson Matthey's expertise in specialty metals and chemicals is reflected in its market value of USD 6.6bn; how much of this represents its marketing skills is probably a moot point.

In the hard rock world of platinum mining, academic treatises may sometimes be useful, but for miners, the realities hinge on attempts to fit successfully into long term supply-demand dynamics, and to hopefully turn in sustainable profits, while keeping all sorts of demanding stakeholders at bay, and preferably happy.

The collapse of most PGM prices in 2008 damaged the global sector. As the biggest player in the sector, even Anglo Platinum had to swallow some humble pie, mounting as it did a ZAR 12.5bn rights issue earlier this year, mainly to repair its enfeebled balance sheet.

Selected platinum stocks
	Stock	From	From	Value
Tier I platinum	price	high*	low*	USD bn
Anglo Platinum	ZAR 699.50	-15.8%	15.8%	26.733
Impala Platinum	ZAR 190.69	-16.6%	16.3%	17.479
Lonmin	GBP 18.15	-17.4%	35.0%	5.785
Averages/total		-16.6%	22.4%	49.997
Weighted averages		-16.3%	17.9%
Diversified
Anglo American	GBP 29.33	-2.7%	36.2%	62.064
Mvela Resources	ZAR 46.69	-18.8%	23.3%	1.469
Norilsk	USD 18.37	-8.3%	44.3%	35.018
Camec	Now at ENRC
ARM	ZAR 180.75	-12.3%	24.2%	5.580
Xstrata	GBP 13.07	-3.2%	56.9%	61.033
Averages/total		-10.5%	32.0%	104.132
Weighted averages		-5.5%	37.9%
Tier II platinum
Stillwater	USD 16.20	-12.3%	169.6%	1.584
Aquarius Platinum	GBP 3.75	-23.4%	77.4%	2.739
Northam	ZAR 47.45	-17.8%	33.7%	2.483
NA Palladium	CAD 4.55	-15.1%	81.3%	0.664
Zimplats	AUD 11.65	-7.9%	22.6%	1.237
Eastplats	CAD 1.50	-13.3%	111.3%	1.025
Anooraq	CAD 1.28	-28.9%	64.1%	0.253
Averages/total		-17.0%	80.0%	9.985
Weighted averages		-17.3%	66.3%
* 12-month
Source: market data; table compiled by Barry Sergeant