Platinum producers struggle to meet demand in tough operating conditions

RBC Capital Markets is holding its inaugural platinum group metals (PGM) conference today, Friday May 16, in London.  The conference brings together senior executives from industry-leading companies including Eastern Platinum, Mvelaphanda Resources and African Rainbow Minerals. Opening the conference, Leon Esterhuizen, Analyst, Global Mining Research at RBC Capital Markets said: “We are dealing with an industry in distress. While the world needs more platinum the producers are being prevented from delivering by challenges such as restricted electrical power supply, limited and shrinking skills pool and sharply increasing capital and operating costs. However junior companies who are able to succeed in this climate and capitalise on the very high metal prices will potentially become prime take-over targets for larger companies, enabling them to break into the select group of only a handful of major global PGM producers.  The race is on!”Regarding rumours of corporate activity and a bid for Eastern Platinum Ian Rozier, President and CEO said: “Eastplats is a public company and we have to be realistic – it could happen.  We have a great footprint in the PGM sector and if somebody wants a footprint then we’re obviously the one.  However, management cannot become diverted with this – our job is to execute our growth plan to maximize value for shareholders and that’s what we intend to do.”

Also speaking, Pine Pienaar, CEO of Mvelaphanda Resources said; “We are positive about the outlook for the PGM market, with both supply and demand fundamentals remaining robust. Should shareholders approve the transactions with Anglo Platinum and Northam, Mvela Resources will be well positioned to participate in this vibrant sector through its 63% shareholding in Northam.”

On the relevance of Mvela Resources’ investment in Northam, he added; “Northam offers a unique mix of strong cash flow and gearing to PGM prices at the current mine and significant organic growth at Booysendal. Strategically we believe the company is also well positioned to participate in further corporate activity for the benefit of shareholders, including Mvela Resources.”

Other speakers sharing insights at the conference were African Rainbow, Braemore Resources, Platmin, Platinum Australia, Platinum Group Metals, Ridge Mining, and Wesizwe Platinum.