Tharisa Minerals, the platinum group metals (PGMs) and chrome co-producer, said yesterday that despite the PGM prices trading in the lower half of their 12-month range, driven by the economic slowdown, prices had not retreated as much as anticipated.
In its production report for the fourth quarter and year ended September 30, 2021, the group said demand-supply fundamentals, particularly for palladium and rhodium, remained in deficit, with platinum projected to be in a deficit within the next 18 months, according to consensus market analysis.
"While supply from Russia is difficult to predict, primary supply from South Africa is slowing, driven by lack of development, rising costs and electricity curtailments, affecting deep-level mines in particular. At the same time, the increasing importance of PGMs for the future of the hydrogen economy underpins our conviction that the fundamentals for these precious metals remain strong," Tharisa said.
According to the group, chrome prices were volatile during the quarter, where they retreated in line with expectations, mostly due to stainless steel and ferrochrome production curtailments in China.
"Consequently, port inventory rose slightly, albeit off a very low base. Inflationary cost pressures, supply chain constraints, and the Covid policy in China remained key macro issues to the market," it said.
The group, which is dual-listed on the Johannesburg and London stock exchanges, said towards the end of the quarter, increased demand stimulated a higher price environment as production of steel and alloy normalised.
"We believe that supply disruptions will mitigate a price retreat in the face of pricing risks and slowing economies heading towards a recessionary environment," it said.
The group reported a 5.1% in chrome production, amounting to 1.56 million tonnes (Mt).
Production guidance for the financial year 2023 is set between 175 Mt to 185 Mt and PGM output of 175 000 ounces to 185 000 ounces compared to the production of 179 200 ounces, a 13.65% increase from last year.
The average basket price for PGMs of $2 564 (R44 383) per ounce represented a 16.6% decline year-on-year, while the chrome price was $209 per tonne, a 35.7% rise year-on-year.
Tharisa CEO Phoevos Pouroulis said, operationally, this had been a rewarding year that would translate to a strong set of financial results, despite the macro challenges that have impacted global supply chains, inflation and the mining sector.
"This operational performance is built on key decisions we made some years ago with the goal of accelerating our growth strategy and thus building a highly innovative, stronger, and more sustainable company," he said.
He said central to the company's success had been the continued efficiency at its flagship Tharisa Mine, where production increased across the board, with the Vulcan Plant contributing to increased production, resulting in improved recoveries.
"One of Tharisa’s core values is maintaining a strong health and safety record. This was again achieved during the year, delivering seven fatality-free years and six million fatality-free shifts.
"We continue to strive to be a zero-harm company. On the corporate front, we have simplified our structure by fully aligning our long-term BEE partners as shareholders in the broader Tharisa business. We have advanced our position in Karo Platinum, which is on track to become the second world-class asset in our portfolio," he said.
Pouroulis said the next major milestone for Tharisa is ‘ground-breaking’ at the Karo site in December 2022, as this PGM asset moves into the construction phase, with inaugural production planned for within the next 24 months.
"Tharisa remains firmly committed to its strategy of delivering sustainable growth and value to all its stakeholders despite the current volatility in the global markets," he said.
BUSINESS REPORT