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OPINION

PGMs go supernova

on’t tell anyone Guv…but it seems the
DSouth African platinum sector may/
just might/could/perhaps/finally be turn-
ing around despite the fact that the plati-
num price itself is still at depressed levels
around $US1,000/oz compared with highs
above $US2,000/oz back in December
2007.
Certainly, a number of the platinum
stocks have recovered big time with the
outstanding example being Impala Plati-
num Ltd (Implats). The Implats share price
is up nearly eight-fold from R20 in mid-
2018 to levels just below R160 in early
January.
Since 2010 platinum has been on a one-
way ride south from then levels around Impala Platinum is one of several South African PGM miners to enjoy a renaissance in the
$US1,800/oz and the SA platinum industry last 12 months thanks to strong palladium and rhodium prices
has been hammered into the ground de-
spite various experts calling any number of largely dependent on platinum for their It’s worth recalling another notable quote
imminent “recoveries” during that period. bottom-line profits because they are pri- from the early 2000s when the platinum
One of the more authoritative turna- mary producers of that metal. Palladium sector was booming and it seemed noth-
round calls came in November 2017 from and rhodium are secondary by-products ing could go wrong...go wrong…go wrong.
Northam Platinum plc chief executive Paul along with the large quantities of copper, Asked what his contingency plans were in
Dunne whom commented that he was nickel and chrome that the platinum min- the event of a setback to the platinum mar-
“getting excited” about recent develop- ers produce from the Merensky and UG2 kets – which have always been notoriously
ments in the platinum markets, adding he reefs they exploit. volatile – PTM chief executive Michael
was seeing “real evidence” that improve- But the soaring prices of palladium and Jones replied: “Adversity? Bring it on!”
ments were under way. rhodium, combined with a weakening of As the saying goes “be careful what you
Platinum at that stage was sitting around the rand against the US dollar, have re- wish for, you may just get it”. Jones sub-
$US940/oz but a year later it was back stored cash flow and profitability to an in- sequently commented in July 2018 that
down to around $US780/oz. Asked in ret- dustry which was in dire straits. JP Morgan “we’ve been through business hell and
rospect about his prediction, the down-to- Cazenove estimated in a research report back”.
earth Dunne’s reply was: “I should have published in April 2018 that some 60% of Lonmin – once the third largest platinum
kept my big mouth shut” but he was bang the SA platinum sector was cash negative producer in the world – disappeared last
on the money in one key respect. at then ruling PGM prices. year when it was taken over by Sibanye-
He commented that the markets would The SA platinum sector is now all back Stillwater Ltd.
see a phased recovery with “palladium in the black or rather what’s left of it is back This group – run by Neal Froneman –
running first, then rhodium and finally in the black because the past five years has so far been the dominant player in the
platinum”. That is exactly what has sub- have seen plenty of bloodshed as the ma- new platinum stakes. Froneman bought
sequently happened although the jury is jors restructured and a number of juniors the Rustenburg Platinum division from
still out on platinum which only managed fell by the wayside. Anglo American Platinum; then acquired
to struggle back above the $US1,000/oz About 15 years ago former Aquarius Aquarius Platinum and then – in a deal
mark in early January. Platinum chief executive Stuart Murray fa- which was widely criticised at the time
At the time Dunne made his call in 2017 mously described the SA platinum sector because of the amount of debt he had to
the palladium price was sitting around as consisting of “three 600lb gorillas and shoulder – he bought the Stillwater palla-
$US1,000/oz having risen from just over a whole lot of rats and mice and we like to dium mine in the US.
$US700/oz in January that year. As of think of Aquarius as being ‘King Rat’”. His gamble has paid off as the palla-
January this year, the palladium price was One of those 600lb gorillas no longer dium price has continued to soar. Implats
around $US2,300/oz. exists while a number of those “rats and last year followed Froneman’s example by
In November 2017 the rhodium price mice” – including Aquarius – have ended buying North American Palladium and, ac-
sat around $US1,300/oz. It is currently up as roadkill or been taken over by other cording to assessments by many analysts,
north of $US6,000/oz and let’s not forget companies; farewell to the likes of Atlatsa getting a better deal than Sibanye Stillwa-
this is the most volatile of the PGMs. It sat Resources, Platinum Australia, and East- ter into the bargain.
around $US500/oz in 2003 before spiking ern Platinum. So, the volatile platinum business could
to nearly $US10,000/oz in 2008 and then Yet others are hanging in there by the be poised for a dramatic recovery from its
collapsing back to around $US1,000/oz in skin of their teeth – such as Platinum worst-ever recession. I wonder how long
2009. Group Metals Ltd (PTM) which was forced the good times will last this time around.
So, is it finally platinum’s turn to shine? to sell its much-vaunted Maseve mine to
If it is then hang on to your hat. Tradition- Royal Bafokeng Platinum Ltd at a knock- Brendan Ryan is a Johannesburg-
ally, the SA platinum miners have been down price – and Wesizwe Platinum Ltd. based mining writer

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