Contrary to the prevailing negativity, Platinum Group Metals (PGM) is pleased with the swiftness with which it received a mining licence for its Rustenburg joint venture.
Internationally there were “a lot of headwinds in the attitude” toward South Africa, the chief executive of the Canada-based firm said on the sidelines of the African Mining Indaba this week, but he believed there was a rosy future for the platinum industry.
Chief executive Mike Jones, an engineer based in Vancouver, said the legislation that allowed for new order mining rights had opened up the industry to new players and he believed the government was not getting sufficient credit for this.
Contrary to the prevailing perception that the platinum industry was lacklustre, he said China’s decision to require heavy and medium duty trucks to install catalytic converters would be a big boost in the years ahead. He believed the European market would pick up too as people finally traded in their aging vehicles.
Jones was uncomfortable with political questions and said he did not wish to be drawn into domestic controversies. He acknowledged that there had been difficulties in the platinum belt in the country, culminating in the Marikana massacre last year. However, his company had been careful to consult with local communities.
The principal municipality for the mine is Moses Kotane, which is centred on Mogwase and includes the Pilanesberg nature reserve and Sun City.
The company had taken care to identify leaders in the communities “to foster a climate of mutual respect where both sides understand what their objectives are. We have to respect the communities’ needs, but they need to respect our needs [to achieve] a return on investment.”
Chris Freimond, a Vancouver-based public relations practitioner and former South African who represents Jones, said the new platinum and palladium mine near Rustenburg – the Western Bushveld Joint Venture – was a partnership with Chinese state-owned firm Jinchuan and black empowerment firm Wesizwe. Jinchuan has a controlling stake in Wesizwe, which in turn has a 26 percent stake in the venture.
Wesizwe’s board is chaired by Dawn Mokhobo, who is also a director of Gidani, Engen, Allied Electronics, Sabvest and Massmart.
First production for the joint venture is scheduled for late 2014. PGM and Wesizwe have invested $100 million (R887m) at the site. In December, a loan facility of $260m was approved by Barclays/Absa, Standard Bank, CAT Financial and Société Générale.
Jones said Mineral Resources Minister Susan Shabangu had pledged to issue a mining licence within a year of application “and we received it within nine months”.
The total capital budget for the project is over $500m.
Pressed on whether South Africa was an investment friendly destination, Jones said the primary rules governing the mining industry had not changed. “The government has communicated what the requirements are,” he said.
PGM’s second major investment is the Waterberg project on the north limb of the Bushveld Complex.
This is in partnership with the Japanese state company Jogmec. Jones said this was still in “the exploration stage”, but involved a rich belt that was “near the surface”.