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Dual-listed Southern Palladium is set to build a new platinum and chrome mine in Limpopo after it was granted a 30-year mining right for the Bengwenyama project.
The mining right, covering 5,280 hectares, paves the way for the mining of platinum group metals (PGMs), chrome, gold, copper, cobalt, silver and nickel at a time when strengthening PGM fundamentals has driven a metal price rally over the past year.
Southern Palladium MD Johan Odendaal told Business Times the project was expected to be a “showcase” for partnerships between corporates and communities. “We went into this project in partnership with the local Bengwenyama community. So they are a big partner in this project. Certainly, we’ll see a lot of benefits through the mine development,” he said.
The mine has been described as one of the most significant undeveloped PGM projects globally, given the shallow and high-grade orebody, while production is expected to be low-cost.
A definitive feasibility study underscored the additional benefit of high-grade chrome co-production. At stage two, the project’s annual output is expected to exceed 400,000 ounces of PGMs and 1-million tonnes of high-grade chrome concentrate.
Odendaal said it will be a hybrid operation whereby initially mechanised mining methods will be utilised with in-stope conventional mining.
Odendaal said Southern Palladium expected production from 2028 with a steady state of stage one production by 2030.
In stage one, up to 3,700 people will be employed, with about 7,000 people employed when the mine enters full production in stage 2. “So it’s a lot of people that will be employed eventually. What is important as well in mining operations is that multiplier effect that the mine has in the surrounding area. As much as five to seven times in terms of employment. So that’s sort of a multiplier effect that you have in the surrounding areas,” said Odendaal.
Several jobs were lost in the area when smelters, including Glencore’s Lion Smelter in Steelpoort, were shut down due to steep power costs. However, the smelter was recommissioned in February, albeit at lower capacity. “We can take a lot of those job losses into the operation of new mines,” he said.
Back in June 2022, Southern Palladium had raised AUS$19m (R212m) to start the exploration drilling and complete its pre-feasibility study. The overall capex requirement for the full programme is estimated at $279m.
Odendaal said the company was positive about the longer-term outlook for PGM and pointed to a structural deficit driven by shortages of platinum, palladium and rhodium. The optimism for PGM continues as the anticipation of a drastic decline of PGM uses in the autocatalyst industry for internal combustion engines did not materialise.
Odendaal said in Europe, they now foresee the internal combustion engines and, in particular, hybrids being there for much longer. He said the new applications, including the development of AI, were a boost for platinum.
“AI in the next couple of years is going to explode. It requires data centres, and data centres require storage. So, the application of both platinum and ruthenium in coating the hard drive can significantly improve the capacity of that hard drive to store data,” he said.
Miracle Upon Miracle Investments owns 100% of the project, of which Southern Palladium holds a 70% stake and the Bengwenyama Traditional Council, on behalf of the Bengwenyama Community, holds a 30% ownership interest.
AI in the next couple of years is going to explode. It requires data centres, and data centres require storage. So, the application of both platinum and ruthenium in coating the hard drive can significantly improve the capacity of that hard drive to store data
— Southern Palladium MD Johan Odendaal
The Bengwenyama Traditional Council also owns a 5.7% ownership interest indirectly in Southern Palladium through the community investment vehicle Nurinox.
The Bengwenyama Traditional Council also owns a 5.7% ownership interest indirectly in Southern Palladium through the Community investment vehicle Nurinox. Miracle Upon Miracle litigated to finally receive the opportunity to get the mining right from 2006 to 2014 in the Constitutional Court after the mining right was awarded to someone else.
Odendaal said, while understandably granting a mining right required studies into environmental assessments and the water use impacts of mining operations, decisions needed to happen sooner.
“There is no urgency from various departments to get this through because mining is still the backbone of this country and it still takes too long. The decision-making and the urgency are not there, unfortunately, and it needs to happen sooner,” he said.
Odendaal said a lot of work was needed to shorten applications for mining rights, including implementing the cadastral system nationwide. “The cadastral system has been implemented, but rolling it out to other provinces is still slow,” he said.
The department of mineral resources and energy rolled out the cadastral system, which maps out South Africa’s mineral rights in the Western Cape, and it will be rolled out nationwide in March 2027.
Business Times