Riding the palladium wave, Implats to build new mine in 2021

JOHANNESBURG — The price of palladium has been on a tear in recent months, overtaking the gold price. This has all been down to a massive supply deficit that has existed since 2012 and the situation is expected to remain this way for the next few years. Amid this backdrop, miner Implats believes palladium isn’t in a bubble and that demand for the metal could continue for the next few years to come. That’s why Implats is now building a new palladium mine in the Waterberg that will come online in 2024. South Africa’s mining sector will certainly welcome this development and, hopefully, it will help breathe new life into the sector. Helping fuel Cyril Ramaphosa’s drive for jobs. – Gareth van Zyl

By Felix Njini

(Bloomberg) – Impala Platinum Holdings Ltd. plans to start building a new palladium mine that could begin producing as soon as 2024 as the company’s outlook for metals turns bullish.

Implats, as the second-biggest platinum miner is known, plans to start work on the Waterberg project in South Africa in 2021, Chief Executive Officer Nico Muller said. The producer is also considering boosting output at its jointly held Mimosa mine in Zimbabwe by 30% as it bets on a long-term shift in platinum-group metals prices, Muller said.

A surge in palladium prices and a weaker rand is dispelling the gloom that gripped South African miners just a year ago. The metal used in pollution-control devices for car engines is forecast to remain in deficit for an eighth straight year in 2019, and Implats isn’t the only company seeking new sources of supply. The world’s top platinum supplier, Anglo American Platinum Ltd., is studying plans to ramp up palladium output through the expansion of its flagship Mogalakwena mine.

“I believe the change in PGMs is structural and not cyclical, so we are fully confident that the buoyant market we see today is going to prevail for the next 10 years,” Muller told reporters in Johannesburg after announcing earnings Thursday. “When you contemplate a project like this, you have to have a long-range view, and we have a very bullish position at the moment.”

Read also: Amplats declares biggest dividend since 2008 as Palladium surges

Despite a stronger market for platinum-group metals and improved liquidity, Implats is sticking with plans to restructure loss-making mines at its Rustenburg complex, Muller said. Implats will evaluate options to boost output in existing businesses and may consider assets outside its current portfolio, the CEO said.

The shares have rallied 63% this year.

Implats will exercise its options to increase its stake to more than 50% from 15% of the Waterberg project, which is being developed jointly with Platinum Group Metals Ltd. and Japan Oil, Gas and Metals National Corp. The deposit could produce about 450,000 ounces of palladium and about 290,000 ounces of platinum a year, initial studies show. The high proportion of palladium means raising money is unlikely to be a major concern, Muller said.

“I don’t see financing to be a material barrier to our ability to execute the project,” Muller said.