Tharisa, an SA chrome and platinum group metals (PGMs) miner, boosted its final dividend payment more than fourfold as firm metal prices offset disruptions to its sole asset from the Covid-19 lockdown.
The PGMs were the star performer in the year to end-September due to a steep increase in prices and a weak rand. Stainless steel ingredient chromex realised lower prices.
Tharisa declared a $0.035 per share dividend, an increase of 367% compared with the previous year. The payment equates to 17% of aftertax profit. The company’s policy is to pay at least 15%.
Output of the six metals making up Tharisa’s PGMs increased nearly 2% to 142,100oz, while chrome production rose 4% to 1.34-million tonnes.
“Taking into account the disruption of the Covid-19 pandemic, which saw SA implement one of the harshest national lockdowns not only in Africa but globally, Tharisa delivered record production across several months during the financial year, underscoring the health of the business in the face of unparalleled uncertainty,” CEO Phoevos Pouroulis said.
Revenue grew by a fifth to $406m.
Tharisa expects to generate up to 165,000oz of PGMs in its 2021 financial year and up to 1.55-million tonnes of chrome concentrates, which are primarily sold to China.
As a chrome concentrate producer, Tharisa is one of the companies opposed to the SA government’s proposed export tariff on concentrate exports to protect its ferrochrome industry.
The ferrochrome industry is buckling under a sixfold increase in electricity prices in the past decade, making it uncompetitive against China, which has grown to dominate world ferrochrome production because of cheap, reliable electricity and buying chrome concentrate and ore from SA, the world’s largest source of these products.
The size of the tariff is uncertain, but industry players speak of a range of 20% to 40%, which chrome ore and concentrate producers warn will damage their operations and cost jobs.
“It remains unclear how, when or if the tax will be administered,” said Pouroulis.
“This proposed tax will not provide lasting or coherent support to the ferrochrome industry, and the only sustainable and viable aid to this downstream industry is subsidised electricity pricing,” he said.
There have been no talks between the government departments involved in formulating the proposed tariff and the primary chrome concentrate producers, said Michelle Taylor, Tharisa’s COO.
As one of the top four SA chrome concentrate exporters, accounting for about 10% of SA’s 12-million tonnes of sales, Tharisa will be able to weather a tariff, which will at best be a short-term solution. But other smaller, marginal chrome miners will close, she said in an interview.
Tharisa has the benefit of mining both PGMs and chrome, with 25% of the latter upgraded to specialty grade chrome which fetches a premium of about $20/tonne.
In the year to end-September, the PGM price increased to $1,704/oz from $1,081/oz a year earlier.
Metallurgical grade chrome concentrate prices fell by nearly 14% to $140/tonne.
In Zimbabwe, delays caused by the Covid-19 pandemic have pushed back timelines for the Karo exploration project by a year. Tharisa plans to develop chrome and PGM operations on the world’s second-largest known PGM deposit, a geological formation called the Great Dyke.
“We still are of the view that the Great Dyke of Zimbabwe presents a fantastic opportunity to mine high-grade, low-cost PGMs and remains a focal area for our expansion strategy.”
Tharisa will be able to inform investors more fully about Karo in March 2021, Taylor said. The deposit is next to the giant Zimplats operation owned by Impala Platinum.
“PGMs look magnificent ... Zimbabwe is known for its PGMs and our peers have done well there,” she said, adding it is part of a geographical diversification strategy Tharisa is developing.
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