Anyone who has read the South African governments's New Minerals and Mining Policy could have difficulty believing the hi-lighted denials in the following report.I believe this arrangment is a practical consequence of the knowledge these companies have regarding the changing political equation in South Africa.If they don't use it,they lose it.The next logical form of insurance for them would be to acquire interests in off shore areas of proven Platinum and Palladium resourses.The Sudbury Basin in Ontario,Canada is the third largest area of production of these metals after Russia and South Africa.
This area is presently experiencing a resurgence of PGM exploration with several junior companies active in the field.Besides INCO and Falconbridge involvement other large international PGM producers are reportedly negotiating with one or more of these junior companies.
Monday 05 July 1999
Impala-Amplats in mineral rights swap
by David McKay
Impala Platinum expects to lift platinum production by 50 000 ounces a year
THE mineral rights agreement between Anglo American Platinum Corporation (Amplats) and Impala
Platinum (Implats) is the first cooperation between the two companies for at least five years, and
indicates the combined optimism they have for world platinum demand.
Amplats spokesman Johan Adler says government's insistence that major mining companies make
use of their mineral rights was not particularly a spur in transacting the mineral rights swap. "This issue
had been on the table for quite a while. It made pure business sense," he says. Implats MD Steve
Kearney is of a similar mind: "The deal was not done in isolation (of government's new minerals and
mining policy), but it would have been done anyway," he says.
Apart from the access to new mineral rights, the deal is also low risk. Now, both companies have
access to additional land without having to make the usual capital outlay. Information about the two
zones is available and the land can be accessed from existing infrastructure. This will give the platinum
producers more flexibility and enable them to respond to the growth demands of the market or, indeed,
to throttle back production if necessary.
The mineral rights swap will enable Implats to mine about 2,1-million ounces of platinum adjacent to its
Nos 8 and 12 shafts. In return, Amplats will have access to a similar reserve owned by Implats on its
Moddegat farm which is adjacent to the Amandelbult mine, a kingpin operation in the Amplats' stable.
"It's shallow and good quality," Adler says of his company's gain. Kearney believes his newly acquired
mineral rights will enable the company to reach 1,1-million ounces of production a year, producing 50
000 more ounces of platinum than at present. "They (the reserves) are between 500m to 1 000m deep
of which part can be accessed through the No 12 shaft, the lowest cost shaft in the industry," he says.
The rationale for the mineral rights swap is to cater for growth in world platinum demand, recently
upgraded to about 3% by Amplats' MD Barry Davison, and more conservatively pitched at between 2%
to 3% by Kearney. There is a growing sense that Russian stockpiles of platinum are ebbing while the
growth of platinum demand in autocatalysts is growing.
Amplats says its strategy for the future is to create more demand for platinum, grow into that increased
demand by lifting platinum production levels - as it may do with the new mineral rights - and then
optimise the efficiencies on the operations. Adler speaks of a number of projects "under consideration"
by Amplats, while Kearney believes there may be grounds for further talks between Amplats and his
company on additional mineral right swaps.
Analysts believe the transaction proves above all the pragmatism of SA's two key platinum producers.
"This is good for the industry and although the scheduling in exploiting the mineral rights is uncertain, it
proves that they can be pragmatic," says Deutsche Morgan Grenfell's Greg Hunter. It also underlines
that while in other mining industries, offshore exploration is essential, SA has some of the best
platinum mineral reserves at its fingertips, he adds. Another analyst warns however, that it is important
for Amplats and Implats not to bring on production too quickly or it may find the window of opportunity
closing faster than it should. |
