South Africa could go platinum, says Northam Platinum CEO

Image credit: Bruce Paulmac at English Wikipedia, CC BY-SA 3.0, via Wikimedia Commons

Northam indicated that it was inviting bids for a potential transaction after an exploratory approach by an unnamed major platinum miner in the country.

Bloomberg reported that bigger rival Valterra Platinum had made an informal approach to Northam. Valterra has declined to comment.

Dunne declined to give details during Friday’s results calls, but said Northam “will listen to what potential third parties have to say about structure as well as value”.

“If there was to be a transaction... that would lead to, potentially, further consolidation,” Dunne said.

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Northam reported a sharp rise in headline earnings per share to R30.44 for the year to 30 June, up from R3.81a year earlier, driven by record production and higher metal prices.

That allowed the company to pay its highest-ever dividend, of R10 a share, a 400% increase from last year’s final payout.

Miners may look to consolidation and operational efficiencies to sustain platinum output.

Production in South Africa, which accounts for 70% of global output, is down 26% from its 5.3 million-ounce peak in 2006, as ageing mines, rising costs and years of underinvestment weigh on supply of the metals used to make devices to curb vehicle emissions.

While the platinum industry faces a long-term challenge from electric vehicles, which do not require autocatalysts, slower-than-expected EV adoption has eased near-term concerns about PGM demand.