Platinum in South Africa 2008 Platinum Contents June 2008
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June 2008 Platinum in South Africa 2008 Platinum Contents June 2008 Sources of platinum 1 South Africa 1 Russia 2 Canada and North America 3 Zimbabwe 4 Global Market 5 Platinum demand 5 Automotive demand 5 Jewellery demand 6 Industrial and investment demand 6 Platinum supply 6 Platinum price 6 Outlook 7 Legislative and policy environment 8 South African PGM production: Western Limb 15 South African PGM production: Eastern Limb 16 Platinum projects currently under development in South Africa 17 Main participants Anglo Platinum 21 Impala Platinum 31 Lonmin 39 Northam Platinum 43 Aquarius Platinum 46 African Rainbow Minerals Platinum 50 Royal Bafokeng Resources 53 www.researchchannel.co.za Platinum Contents June 2008 Junior platinum companies and explorers Jubilee Platinum 54 Lesego Platinum 56 Mmakau Mining 57 Nkwe Platinum 58 Platmin 59 Platinum Group Metals 60 Ridge Mining 61 Wesizwe Platinum 62 Xstrata 63 The material contained in this report was compiled by Hilary Klopper and the Research Unit of Creamer Media (Pty) Ltd, based in Johannesburg, South Africa. To contact Creamer Media call +27 11 622 3744 or email [email protected]. www.researchchannel.co.za Platinum June 2008 List of abbreviations ACP – Angloplat Converting Process Afplats – African Platinum Angloplat – Anglo Platinum AQPSA – Aquarius Platinum South Africa Arm – African Rainbow Minerals ArmGold – African Rainbow Minerals Gold BEE – black economic empowerment BIC – Bushveld Igneous Complex Bits – bilateral investment treaties BMR – Base Metals Refinery BRPM – Bafokeng Rasimone Platinum mine CTRP – Chromite Tailing Retreatment Plant DME – Department of Minerals and Energy DTI – Department of Trade and Industry EMPR – environmental management programme report EPM – Eastern Platinum Mine ETF – exchange-traded fund GFSA – Gold Fields South Africa ICSID – International Centre for the Settlement of Investment Disputes Implats – Impala Platinum IRS – Impala Refining Services Kalplat – Kalahari Platinum Lonplats – Lonmin Platinum MFIC – Molopo Farm Igneous Complex MMZ – main mineralised zone MPRDA – Mineral and Petroleum Resources Development Act MSB – massive sulphide underground body Mvela – Mvelaphanda Resources Nkwe SA – Nkwe South Africa oz – ounces PCMZ – peridotite chromititic mineralised zone PGM – platinum-group metal PLA – Platinum Australia PMR – Precious Metals Refinery PPRust – Potgietersrust Platinum PSA – pool and share agreement PTM – Platinum Group Metals Rom – run of mine RBN – Royal Bafokeng Nation RBR – Royal Bafokeng Resources www.researchchannel.co.za Platinum June 2008 RPM – Rustenburg Platinum Mines SavCon – Savannah Consortium SMC – Selous Metallurgical Complex UG2 – Upper Group 2 ULP – ultralow profile WBJV – Western Bushveld JV Zimplats – Zimbabwe Platinum Mines 4E PGM – four element platinum-group metals – platinum, palladium, rhodium and gold www.researchchannel.co.za Platinum June 2008 Sources of platinum Platinum is only produced in five countries around the the largest metals-bearing intrusions in the world, the world. Of these South Africa and Russia are the largest Bushveld Igneous Complex (BIC). producers, with small amounts of the metal also being produced in the US, Canada and Zimbabwe. The Bushveld Igneous Complex Key: Anglo Platinum Platinum supply by region 2003-2007 Impala Lonmin Polokwane Million ounces PPRust Others Lebowa Messina Paschaskraal South Africa Russia North America Others Amandelbult Twickenham Northam Marula Modikwa 7 Union Kennedy’s Vale Der Brochen Two Rivers Booysendal 6 Crocodile River Bafokeng- Waterval Everest South Rasimone Impala Sheba’s Ridge 5 Rustenburg Blue Ridge Pretoria Kroondal Pandora Marikana Lonmin 4 Source: Johnson Matthey 3 2 The BIC hosts over one-half of the world’s platinum, chromium, vanadium and refractory minerals. 1 The complex covers over 66 000 km2, and is divided 0 into an eastern and western limb, with a further north- ern extension, known as the northern limb. The intru- 2003 2004 2005 2006 2007 sion is located in the northern reaches of South Africa, Source: Johnson Matthey Platinum 2008 cutting through the Mpumalanga, North West and Lim- popo provinces. It has a series of distinct layers, three South Africa of which contain economic concentrations of platinum- group metals (PGMs). PGMs include iridium, osmium, A total of 5,29-million ounces of platinum were pro- palladium, platinum, rhodium, and ruthenium. duced in South Africa in 2006, and platinum research company Johnson Matthey stated that 5,04-million The principal PGM-bearing reefs in the BIC are the Me- ounces were be supplied by the country’s mines in rensky reef and the Upper Group 2 (UG2) reef, which 2007. occur around the eastern and western limbs of the complex. A third PGM-rich layer, the Platreef, is found only on the northern limb at the north-eastern bound- PGM Supplies: South Africa ‘000 oz ary. 2007 2006 Platinum 5 220 5 290 The Merensky and UG2 reefs contain most of the Palladium 2 795 2 905 world’s known reserves of PGMs. The Merensky ore- Rhodium 695 690 body, which is about one metre thick and has a thin seam of chromite along the top and bottom, has been Source: Johnson Matthey Platinum 2007 Interim Review the principle source of PGMs since it was first worked Precious metals research and consultancy, GFMS, in 1925. indicated in its GFMS 2008 Platinum Survey that platinum production from South African mines in 2007 The UG2 reef, the structure of which is fairly uniform was 5,07-million ounces. throughout the BIC, is rich in chromite, but lacks the Merensky’s gold, copper and nickel by-products, South Africa’s platinum mines are converged on one of though its PGM reserves may be almost twice those of www.researchchannel.co.za 1 Platinum June 2008 the Merensky reef. The exploitation of the UG2 orebody technological developments in the South African gold began in the 1970s. mining industry have made deposits feasible at a depth of four kilometres and this technology could be trans- The Merensky and UG2 reefs are narrow, and both have ferred to PGM mines over time. been mined using narrow reef methods, with many op- erations continuing to use these methods today. How- It is estimated that 200-million ounces of PGMs have ever, mechanical and hybrid techniques are progres- already been mined and, between the depths of 1 000 sively being implemented by new and existing mines, m and 5 000 m, 6,8-billion ounces of PGMs still remain, whereby drilling may be carried out either using con- which, at current extraction rates, could meet demand ventional hand-held pneumatic drills, or by means of for at least 780 years. low-profile machines equipped with specialised drilling equipment. The ore is subsequently cleaned from the stopes using low-profile load-haul-dump vehicles. Russia The Platreef, at between 5 m and 90 m thick, is much Platinum production in Russia declined to 910 000 oz in wider than the other reefs, and is mined using open- 2007 from 920 000 oz in 2006. pit methods. The Platreef was not exploited on a large PGM supplies: Russia (‘000 oz) scale until 1993. Opencast mining is also used on a smaller scale to exploit the UG2 and Merensky reefs 2007 2006 where they outcrop. Platinum 910 920 Palladium In 1999, a new estimate of the platinum and palladium resources of the BIC was published in the South Afri- Primary production 3 050 3 220 can Journal of Science, estimating proven and proba- State sales 1 490 700 ble reserves of platinum and palladium at 203,3-million Rhodium 90 100 ounces and 116,1-million ounces respectively. Inferred Source: Johnson Matthey Platinum 2007 Interim Review resources were estimated at 939-million ounces of plat- inum, and 711-million ounces of palladium. Platinum supplies from Russia come from three main These figures stand to increase if other PGM-bear- sources: Norilsk Nickel, which produces platinum as ing reefs in the BIC are mined, or if mining extends to a by-product of nickel mining in northern Siberia; allu- depths below two kilometers. Drilling programmes are vial platinum producers, mainly in the far east of Russia; investigating the Merensky and UG2 horizons below and sales from government-controlled stocks. three kilometres, although a significant amount of ex- ploration work will have to be carried out before these The large alluvial platinum deposits in Russia’s Ural potential down-dip extensions can be categorised as a Mountains have been exploited since 1823. The de- PGM resource. posits once represented the richest known underground sources of platinum, but have since been stripped of The capital investment required to work such deposits the highest-grade ore. From the 1920s, production could be considerable, as working temperatures and from the Urals started to decline, to a point where the transportation costs increase with depth. However, deposits now account for less than 1% of Russian plat- Estimate of platinum and palladium reserves and resources in the BIC as of 1999 Region Proven and probable reserves million ounces Inferred resources million ounces Platinum Palladium Platinum Palladium Northern BIC – Platreef 9,9 11,3 136 136 Eastern BIC – Merensky reef 10,9 4,8 286 165 Eastern BIC – UG2 chromitite 38 32,7 306 301 Western BIC – Merensky reef 66,2 30,6 114 56 Western BIC – 78,3 36,7 97 53 UG2 chromitite Totals 203,3 116,1 939 711 Source: Johnson Matthey www.researchchannel.co.za 2 Platinum June 2008 Russian PGM mining districts and refineries UNITED KINGDOM NORWAY SWEDEN Kola Koryak Peninsula FINLAND GERMANY Norilsk/Talnakh POLAND BELORUSSIA Central Urals Prioksk RUSSIA Kondyor Yekaterinburg Krasnoyarsk KAZAKHSTAN Novosibirsk MONGOLIA CHINA Source: Johnson Matthey Platinum 2004 pgm refinery pgm mining district inum production. However, the region remains of inter- and, as a result, no platinum shipments were made in est as a prospective source of platinum. Investigations the beginning of 2007. The Russian contracts were re- are being conducted into the possibility of exploiting al- portedly being met from stocks abroad or metal leased luvial platinum in the central Urals area that was too fine or bought from elsewhere, with no indications of when grained to have been recovered by earlier mining op- shipments might return to normal.