Chrome and platinum group metals (PGMs) miner Tharisa is set to join a rarefied club as it builds a smelter to produce finished metals and expands into Zimbabwe as well as potentially other minerals in SA.
With an unusually strong interim period behind it in which its earnings before interest, tax, depreciation and amortisation (ebitda) of $124m, or R1.7bn, outstripped full-year ebitda for the previous four years, Tharisa is moving away from its single asset near Brits, North West.
Four key developments will take Johannesburg- and London-listed Tharisa, with its R7.6bn market capitalisation, to the next level of growth.
It is completing its Vulcan plant at the Brits mine to extract fine, powder-like chrome as part of its strategy to reach 2-million tonnes a year of chrome concentrate from 1.55-million tonnes this year. Vulcan will start delivering tonnes shortly after September.
It is tweaking its PGM plant at Brits to push output to 200,000oz of PGMs a year and these metals will be processed in a new 7MW direct-current smelter the company is to build in the next 18 months after its purchase-of-concentrate agreements with Impala Platinum and Sibanye-Stillwater end.
This is a major development for Tharisa, entirely unlocking PGM prices that it loses to its peers and which will flow into the company’s revenue line, said CEO Phoevos Pouroulis. It has done extensive tests with a 1MW plant, which draws on the ConRoast technology developed by state-owned minerals research unit Mintek nearly two decades ago.
“What it means [is that] we capture an additional 15% margin in our PGMs which we are currently gifting to our major peers. Unfortunately the terms don’t change when PGM prices go up,” Pouroulis told Business Day in an interview.
Only three companies in SA have mine-to-market PGM infrastructure: Sibanye-Stillwater, Anglo American Platinum and Impala Platinum, with Northam Platinum smelting and extracting base metals from a product it sends to Heraeus in Germany for final refinement.
The smelter, which is likely to be set up in an industrial area in Brits, will be commissioned in the next 18 months to coincide with the end of the concentrate purchase agreements with the other two companies, he said.
Tharisa is deciding whether to produce finished PGMs using a hydrometallurgical process or to sell a PGM-rich iron alloy containing about 60% of the metals to a refiner in Europe or the US, he said. The cost of the project has yet to be finalised.
Tharisa will replicate the smelter in Zimbabwe where it plans to start limited PGM production from Karo in the next 18 months, Pouroulis said.
PGM concentrate in Zimbabwe comes with a high concentration of copper and cobalt, needing a base metal refinery to extract them before the PGMs can be refined. Tharisa would prefer to join other producers in establishing this costly and complex systems in Zimbabwe, Pouroulis said.
In the shorter term, Tharisa will start chrome concentrate production of up to 10,000 tonnes of high-grade concentrate a month at its wholly owned Salene Chrome subsidiary in Zimbabwe. Output will start before the end of 2021.
“It gives us boots on the ground and to set up in anticipation of the larger Karo project. We want to test a lot of the concessions we’ve received from the government and manage the bureaucratic systems in Zimbabwe in a relatively small project,” Pouroulis said.
Tharisa is contemplating whether to buy the Salene iron ore and manganese business in the Northern Cape, a two-pit operation producing 50,000 tonnes a month of manganese and 30,000 tonnes a month of iron ore. The purchase would fit in with Tharisa’s strategy of supplying the stainless steel and steel markets with chrome, Pouroulis said, declining to give a time frame.
Salene sells its manganese and iron ore to traders who collect it at the mine gates, but if Tharisa buys the operation, it would like to secure railway access to move the minerals to the coast to unlock greater production, he said.
The Salene companies are majority owned by the Pouroulis family and Tharisa has first option to buy these businesses as it did with Salene Chrome.
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