Chrome and platinum group metals (PGM) miner Tharisa says its 2022 year has started strongly, with its full-year production guidance unchanged as it eyes an improvement in precious metal prices as supply-chain issues facing carmakers abate.
In an update for the three months to end-December, its first quarter, Tharisa reported early indications of improvement in the balance between supply and demand for PGMs, with global growth prospects also looking healthy.
Tharisa, which is listed on the JSE and in London, operates a mine near Brits in North West and has two plants — Voyager and Genesis — to recover chrome and PGMs.
The group said on Wednesday PGM production rose 9.2% quarter on quarter to 47,700oz, while chrome production rose 1.5% to 401,800oz.
Guidance for 2022 has been maintained at between 165,000oz and 175,000oz of PGMs, and between 1.75-million and 1.85-million tonnes of chrome concentrates.
This would represent production increases of up to 10.9% for PGMs and 23% for chrome concentrates respectively.
PGM spot markets were weaker than the past several quarters, but early indications are that the supply-demand balance is improving, with bottlenecks in the chip and motor industry abating, the group said. Stockpiles from some of the major producers are also being worked through the market.
PGMs are widely used as a catalyst in the chemicals industry, as well as to reduce emissions in vehicles, but carmakers had struggled in 2021 with production interruptions amid a shortage of semiconductor chips.
“While Covid-19 seems to remain a short-term risk, global growth looks set to recover, with the increasing emissions standards underpinning prices,” Tharisa said.
Prices have risen in the early weeks of 2022, with the current spot basket price at around $2,700/oz, versus prices received for the December quarter of $2,394/oz.
Chrome prices remained steady quarter on quarter but have recently seen an uptick, owing to increased consumption of chrome concentrates in China, as power restrictions eased in many of the major industrial production hubs, resulting in an increase in ferrochrome output supported by stainless steel demand, the group said.
“A great start to our new financial year, which will see the company transform further with the developments at our flagship asset, namely the integration of the Vulcan fine chrome recovery circuit at the Tharisa Mine, enabling us to reach 2-million tonnes per annum of chrome production, [and] reduce costs and carbon emissions per unit,” said CEO Phoevos Pouroulis in a statement.
The group initiated the Vulcan project in August 2019, initially targeting completion by the end of 2020, but it was delayed in March 2020 due to Covid-19, with the project resuming in October of that year.
First production is expected in the group’s second quarter, and the project, which will process live tailings produced by Voyager and Genesis, is expected to increase chrome recoveries by 20 percentage points to 82%. That will lead to lower production costs as fixed expenditure is offset against higher volumes of chrome output, which will also lower the group’s relative carbon emissions. It was also developed entirely in-house by Tharisa’s research & development team.
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