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JOHANNESBURG — In a mining sector struggling with a toxic combination of rising costs, falling prices and labour unrest, Vancouver-based Platinum Group Metals Ltd. believed it could buck the trend.
That dream has now taken a serious hit, with one of its partners abruptly pulling out of its $506-million platinum mining project in South Africa. It’s just the latest blow to the slumping platinum industry, beset by labour violence and soaring costs, although the Vancouver company is optimistic that it can keep its plans alive.
About half of the platinum companies in South Africa – the world’s biggest platinum producer – are estimated to be losing money, industry officials say.
Platinum Group president Michael Jones says his company will try to find new financing to push ahead with its mine in the western limb of the Bushveld complex in South Africa, despite the loss of $21.8-million in planned funding from its partner, Wesizwe Platinum, which holds 26 per cent of the project.
Platinum Group has warned that it might have to delay or halt the project. But in the meantime it still has $90-million in cash, enough to continue construction of the mine, where about 1,000 workers are still employed in the construction phase. “As of this time, we haven’t stopped the work,” Mr. Jones said in an interview.
Another Canadian company, Vancouver-based Eastern Platinum, announced in June that it was halting production at its flagship Crocodile River mine in South Africa. “We have been struggling through a perfect storm of increasing costs on all fronts and depressed metal prices,” Eastplats president Ian Rozier said at the time. He blamed the shutdown on a combination of labour unrest, rising costs, and a stagnant commodity market.
Ivanhoe Mines, the Toronto-listed vehicle of mining entrepreneur Robert Friedland, is still planning its own platinum mine in South Africa and has raised $280-million for its Platreef project, which could become the biggest mining project in South Africa over the next few years, creating about 10,000 direct and indirect jobs.
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