THE persistent climate of labour unrest and unsustainable pay demands could lead to a long-term structural change in South Africa’s platinum mining industry with the producers opting to develop new mechanised mines.
That is the conclusion drawn by JPMorgan Cazenove analysts Allan Cooke and Steve Shepherd in a recently published major review of prospects for the South African platinum industry. The implication of such a development is that the platinum industry would move towards the business model used by the country’s coal producers, where labour relations are far less volatile than on the gold and platinum mines.
The reasons are that the fewer skilled workers employed on the coal mines are far better paid than the larger numbers of unskilled workers employed on the labour-intensive, deep-level gold and platinum mines.
The new platinum mines would be built on the Northern Limb — or “Platreef” — section of the Bushveld Complex. That is where Anglo American Platinum (Amplats) has already established its Mogalakwena opencast mine and entrepreneur Robert Friedland plans to develop his high-tech “Flatreef” underground mine.
The Bushveld Complex is the geological formation that hosts the platinum-bearing reefs and it is split into three separate sections.
The two main sections are the Western Limb around Rustenburg in North West — where the bulk of the industry’s major mines are located — and the Eastern Limb around Steelpoort in Limpopo.
The Platreef section extends northwards from about Mokopane and it is geologically very different from the other two sections.
Platreef platinum grades are generally lower than those found on the Merensky and UG2 reefs mined from the other two sections, but the Platreef has higher copper and nickel content as well as higher palladium grades. Not only does that provide greater diversity of revenue but, as Mr Friedland pointed out at the recent Mining Indaba, the cost of producing platinum could be effectively zero after accounting for the by-product revenues earned from sales of copper and nickel.
The Platreef is also much thicker than the Merensky and UG2 reefs which, as the JPMorgan analysts point out, makes it “amenable to highly mechanised, low-cost and relatively safe bulk mining methods, both open pit and underground”.
The analysts say: “It is not hard to imagine that all the platinum producers may be looking at the Northern Bushveld in an increasingly positive way.
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