JSE-listed Northam Platinum announced last week that it has agreed terms to extend its co-operation agreement with international technology group and offtake partner Heraeus Deutschland and Heraeus South Africa (HSA), the terms of which will see Heraeus contribute R300 million to expand the capacity of Northam’s existing smelter.
The R750 million expansion project entails the construction of a 20MW second furnace at the Zondereinde metallurgical complex in Limpopo by the end of the 2017, which Northam chief executive Paul Dunne says is “a critical element of Northam’s strategic growth”.
He says that the second furnace supports the expansion programme at Booysendal and the increased UG2 mining at Zondereinde and will immediately raise the group’s processing capacity to more than 1Moz of PGMs.
In addition, it reduces operational risk, while providing headroom for third party concentrate purchases and toll treatment arrangements, he says.
Meanwhile, the extended agreement also provides for the renewal of the current offtake and toll refining agreements with Heraeus, and represents a landmark initiative in which both parties will also support product development and optimisation.
Heraeus’ capital contribution will be fixed according to a progress schedule, and paid in tranches.
In return, Northam will renew its toll refining agreement with Heraeus and HSA for a period of 20 years at competitive terms, while Northam undertakes to sell up to 40% of its production to Heraeus or HSA at market prices.
The various elements of the agreement underscore Northam’s plans for growth and expansion, underpinned by a conservative approach to capital expenditure, particularly in the current climate of metal price weakness.
Dunne believes that this investment by Heraeus is a clear sign of confidence in platinum group metals, their markets and in Northam. “This development is significant, not only in that it further cements our companies’ already long-standing business partnership, but is an expression of confidence in PGMs and their markets, Northam’s performance to date, and our expansion strategy, he concluded.