Johannesburg - Billionaire founder and chief executive of Ivanhoe Mines, Robert Friedland, is confident the company’s Platreef Mine in Limpopo will be the “largest platinum mine in the world”.
Speaking at the Investing In African Mining Indaba in Cape Town, Friedland said Platreef would overtake Anglo American Platinum’s open pit Mogalakwena Mine and he added that employees would be skilled.
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The Platreef mine was expected to start operations in 2019. “Employees will be well-paid professionals and not lift anything heavier than a pencil,” he said. He believed the global platinum group metals market was misunderstood and that the company was enormously positive about the market.
Platinum prices have almost halved since 2011 and this has led to belt tightening measures across the industry, including job cuts and closure of unprofitable shafts.
“In our view, only the best mines will survive. We think the deep mines will close. Some analysts are talking about surpluses in the metal; others a deficit. We see the market growing, we see tighter emission standards, we see continued growth of Asia,” he said.
However, the jury is out on whether Platreef will be financially successful. Mining operations generally had a 50-50 success rate, said Peter Major, a mining consultant at Cadiz Corporate Solutions.
“Friedland is the world’s greatest mining developer, but his mines have not been financially successful. This is not necessarily his fault,” he said.
The $1.6 billion (R25.81bn) Platreef is one of three of Ivanhoe’s assets. It also operates the Kamoa copper project in the Democratic Republic of Congo (DRC) and the Kipushi Project is an underground zinc and copper mine in the central African copperbelt, in the Katanga province, also in the DRC.
“The odds are against him. Even if the mines were delivered on schedule, chances are their input costs would be higher and maybe commodity prices may drop. The jury is out,” said Major on the sidelines of the indaba.
However, Friedland noted that air pollution was China’s single greatest problem, killing 400 0000 people a year, and that the country had banned 2.5 million cars on roads ahead of the World War 2 commemoration last year.
Despite this, he said “I am here to tell the South African audience that there is demand for platinum”.
“We see global car sales are at an all-time high.”
He said India and China were important markets.
“These markets are not getting smaller, they are growing at a slower rate. The decline of the rand (has) kept platinum flat. The drop of the rand has helped gold companies, but that has not flowed through to platinum companies, because they are also rand-dominated costs,” he said.
BUSINESS REPORT