South Africa’s Wesizwe Platinum expected to kick off production at its new plant by 2017, with full output within three years afterwards, its chief executive said on Friday.

The project, which will be partly financed by China’s Jinchuan Group, gives resource-hungry China access to South Africa’s coveted platinum industry. The Asian giant has become a major player in African investment and commodities but has not taken a major direct role in the platinum sector yet.

Wesizwe said last week that its shareholders had approved finance for the $877 million (R6 billion) Frischgewaagd-Ledig project, which is expected to produce 350 000 ounces a year in platinum group metals (PGMs), with platinum the main metal at full production.

“The construction process is going to take approximately five to six years, so we expect our early-stage production to start in 2017, then three years from ramp-up to full production,” Arthur Mashiatshidi said.

Wesizwe plans to finance the project together with China’s Jinchuan Group, the China-Africa Development Fund and Micawber, a special purpose vehicle owned by an empowerment trust that was formed to boost black participation in Wesizwe. As part of the deal, the Chinese consortium will take a 45 percent stake in Wesizwe and Micawber 6 percent.

“There is no likelihood of further capital calls, which would change the equity participation structure,” Mashiatshidi said.

He added: “The current Wesizwe shareholders are getting an immunity ticket from further dilution.”

Wesizwe’s financing deal paves the way for a direct Chinese stake in South Africa’s platinum sector, the world’s largest source of the metal.

“(The deal) is a toe-hold for the Chinese to have access to PGMs… If you are going to secure supply by whatever means, you need to be in the game, at the source,” Mashiatshidi said.

Wesizwe’s output is expected to be much lower than that of Anglo Platinum and Impala Platinum, the top two platinum producers, which account for roughly two-thirds of the global supply.

Mashiatshidi added that platinum production costs in South Africa were expected to rise as mines got deeper and mining became more complex.

He said electricity costs were a significant component of the project and that the company had secured sufficient power for the construction phase, despite a warning by utility Eskom that power supply would remain tight until 2015.

South Africa suffered serious blackouts in early 2008 after the national grid nearly collapsed, forcing mines and smelters to shut for days. - Business Report