JOHANNESBURG (miningweekly.com) – The area south of the metallurgical complex at Northam Platinum’s Zondereinde platinum group metals (PGM) mine in Limpopo has been cleared for the construction of the first of the Johannesburg Stock Exchange-listed company’s 80 MW solar power farms.

Each year, this facility will produce 220 000 MWh of secure behind-the-meter electrical energy, reducing annual carbon emissions by 220 000 t and reducing energy costs by 15%. (Also watch attached Creamer Media video.)

Clean, green electricity will flow from this plant on 170 ha towards the end of this calendar year.

Northam plans to halve the R2.6-billion a year that it spends on power, amid recently having clinched two further renewable-energy agreements, these being 140 MW from a wind farm, close to Sutherland, in the Western Cape, and another 80 MW of wheeled solar power, both scheduled to be operating in 2027.

By then, 900 000 MW, or 60%, of energy used at Northam’s operations will be renewable, and the group's carbon intensity will have been reduced by 60%.

In today's terms, Northam will save around R700-million a year into perpetuity – "and we don't plan to stop there", Northam CEO Paul Dunne said during the company’s presentation, covered by Mining Weekly, of dividend-yielding results for the six months ended December 31.

Northam is progressing other renewable-energy projects in a dynamic and rapidly changing technological and legislative environment. These include additional solar and battery storage initiatives.

“We’re actively pursuing other initiatives to further reduce our environmental impact and assist with cost control. As an aside, it's also worth noting the accumulation of stock next to the smelt house.

The interim gross cash dividend of 15c a share is in line with its policy of paying 25% of headline earnings, amounting to an interim gross cash dividend of R59.4-million from income reserves.

Northam sold 456 544 oz of four element (4E), which includes platinum, palladium and rhodium, in the half-year, 2% down on the first six months of 2024, totalling 3.1% lower half-year sales revenue of R14.5-billion.

Operating profit of R1.1-billion was at an operating margin of 7.5% amid 3.7% higher equivalent refined metal production totalling 451 213 4E oz. Half-year capital expenditure remained constant at R2.4-billion.

CHROME YIELD IMPROVEMENT

Northam is continuing to implement a range of smaller scale capital upgrades to its metallurgical facilities, incrementally improving recoveries of PGMs and chrome.

The recently commissioned expansion to the chrome recovery plant at Zonderiende has improved chrome yields to 40%-plus.

Zondereinde is now expected to produce 490 000 t of chrome concentrate this year, with the upper group two (UG2) scavenger plant expected to increase PGM recoveries to 89%. Both upgrades have already paid back their capital cost.

With improved yields, chrome sales are expected to improve to 1.5-million tons.

CHALLENGING PRICING

The average basket price received for all metals appears to have found the floor at around R32 000/4E oz.

The spot price at the time of going to press was just under R33 000/4E oz.

“This is placing pressure on miners as well as refiners and recyclers, and the impact on the world's PGM industry should not be underestimated.

‘This is a very challenging price environment and the longer this market condition persists, the greater the correction will be.

“As long as there is no further deterioration, we’ll continue to invest through the cycle, as we did very successfully in the previous downturn.

“On the supply side, South Africa will continue to dominate but an aging production base and a dearth of new projects is unable to maintain volumes, and South Africa will require further destocking in 2025 just to reach 3.8-million ounces,” Dunne predicted.

“This should perhaps be contextualised against historic production levels from South Africa of around 5.4 million ounces.

“There’s already been a very, very significant decline in South African production. Recycling is suffering from very poor or negative margins and low scrapping rates, and this will persist in the current price environment.

STRONG DIVERSIFIED DEMAND

In contrast, demand is expected to be strong and diversified, with platinum benefitting from being less exposed to battery electric vehicles in China when it comes to auto catalysis. In addition, it is benefitting from substitution of palladium in light duty vehicles.

The industrial demand for platinum continues to grow in new applications, adding to well established areas of demand, such as chemicals and glass.

“Critically, jewellery demand has stabilised with strong growth outside of China, and the current price differential against white gold presents an opportunity to recapture market share,” Dunne noted.

Northam’s estimates suggest a large fundamental market deficit of 15%, or one-million ounces, “which cannot be balanced indefinitely by sales from the vault”.

In addition, it is holding on to its view that primary platinum supply will continue to decline and that rhodium supply is tightening.

Platinum contributed most to Northam in the half-year and rhodium continues to generate a quarter of revenue.

The contributions of chrome, ruthenium and iridium PGMs have also become significant in the mix.

“We would like to highlight to investors that the group's diversified revenue split, allied to our volume expansion, provides significant optionality into the future,” Dunne remarked.

BUSINESS IMPROVEMENT AREAS

Electricity, which makes up 12% of cost, is first on the list of areas identified for business improvement.

Moving to alternative and renewable-energy supplies will reduce this bill by 25% by 2027 and improving chrome yields will lift output to 1.6-million tons for 2026 and 1.8-million tons by 2029.

Eland’s large milling capacity will be used to process additional UG2 from Zondereinde where the existing concentrator constrains mining volumes.

“As we speak, we’re milling 70 000 t of excess UG2 on a trial basis. PGM recoveries and chrome yields are very quickly matched and on some days, exceeded those of Zondereinde.

“We've identified common consumable items across the group, and we intend to streamline procurement using group contracts to benefit from scale.

“Finally, we are approaching the end of an intense growth phase, and we will start to see a reduction in the contract to head count over the coming years.

“The world really needs PGMs, and that demand must be met primarily from sustainable mining operations. Recycling has its own economic challenges, and clearly cannot be relied upon in isolation,” Dunne pointed out.