Shift in global order providing opportunity to strengthen platinum industry

This audio is brought to you by Endress and Hauser, a global leader in process and laboratory measurement technology, offering a broad portfolio of instruments, solutions and services for industrial process measurement and automation. The world's current extraordinary times are providing South Africa's platinum group metals (PGM) companies with an extraordinary opportunity to focus on how to strengthen themselves. Consensus is widespread that a new era is upon us. Trade paths are changing and the move from globalisation to multi-polarity accelerating. With 80% of the world's PGMs supplied from Southern Africa, engagement with other jurisdictions is under way to determine the extent to which relationships can be formed to provide security for long-term supply. While demand for PGMs has risen, certain supply risks are being acknowledged amid historical levels of investment in future supply lapsing. The shift in world uncertainty, combined with shifts in fundamental markets, has given cause for PGM prices to rise. As a consequence of the nature of the major forces, consensus is widening that price support currently underway will outlast the current White House administration and is requiring the PGM mining and marketing industry to organise South Africa and Southern Africa very differently for a generation to follow. "It is our belief that this current upswing in prices will remain longer than has been the case in the past, where we saw relatively short summers following very long winters," Implats CEO Nico Muller emphasised during the Johannesburg Stock Exchange-listed company's stunning set of half-year financial results of 180% better earnings before interest, taxes, depreciation and amortisation (Ebitda) of R18.1-billion, a fivefold increase in headline earnings of R9.3-billion, and free cash flow of R7-billion. Implats closed the period with an adjusted net cash balance of R12.1-billion and R28.8-billion in liquidity headroom. Dominating the results were production performance at mine and PGM processing levels and the 40% increase in the rand basket price. "If you look through all of the financials, the entire PGMs industry is looking a lot more attractive than what it did in the previous period. "Given the fact that we are where we are in terms of metal prices and then increase in revenue, Ebitda and cash flow, it does provide us with a really important opportunity, and that is to change our strategic focus in the company. "During the lean years, we are very defensive. We focus on cost control, capital management. "We now have the opportunity to focus on how to strengthen the company and there is a pipeline of opportunity," Muller outlined at the presentation covered by Mining Weekly. Starting off at the most basic level are a number of early action programmes to initiate life extension projects. These have occurred at the Two Rivers mine, Marula mine and at some of the shafts at Impala Rustenburg. Already approved is R1-billion for Rustenburg's 14 Shaft that will provide mine life extension. "I'm very confident that some of the other early works programmes that we've initiated will result in approval of additional capital," Muller commented. Roughly, a three-year extension to the current steady state 3.5-million PGM ounces a year production profile is on the cards. Thereafter, additional initiatives will be required. Part two is the far-reaching optimisation of the South African PGM industry as a whole, firstly through the sharing of infrastructure. "We will open up some processing capacity to share in the industry and we do believe it's critically important for Southern Africa to protect local beneficiation of the metals, and so I think that the opportunity to do so will increase as we go forward. "Then there are the normal cross-boundary opportunities that always exist. An example of one of the areas that we battle with in the industry is the eastern limb of the Bushveld Complex. We need to reimagine what the eastern ...