Tharisa reports boost as SA’s energy and rail dysfunction helps support chrome prices

Mining group Tharisa said on Wednesday that while it felt pressure from a production fall and lower prices for platinum group metals (PGM) in its third quarter to end-June, dysfunction in SA’s logistics and energy networks helped support chrome prices.

Group net cash rose almost 40% quarter on quarter to $141.5 million at the end of June, it said in an update, with the basket of six PGM metals it produces rising 7.9% to 37 000 ounces, though prices fell 16.6% in dollar terms.

The pressure seen in the PGM market manifested itself in some unusual and often aggressive selling patterns, the group said, amid renewed fears of a macroeconomic slowdown, driven by China and the US.

Chrome prices, however, rose 7.8% in dollar terms, while own chrome-concentrate production fell 6.4% to 378 800 tonnes, with yields slipping. Tharisa ships most of its chrome to China, the world’s biggest consumer of the metal that is often used to harden steel and reduce corrosion. SA accounts for about 80% of the world’s chromite, the chief source of the metal.

While port stocks, which were sitting at multi-year lows have increased, the supply pipeline remains tight, particularly as inland logistics in SA remain challenging, the group said.

“In addition, there have been no major primary output increases in the local market due to the lack of available resources and power constraints for smaller producers unable to access standby power,” it said.

The chrome market looks set to continue its strong performance for the remainder of 2023, said Tharisa. While most PGM commentators have pulled back price forecasts in line with recent events, the long-term outlook for even the most conservative forecasts are indicating higher averages than current spot prices, it said.

Tharisa, valued at about R5.3 billion on the JSE, operates its flagship Tharisa Mine about 35km east of Rustenburg in the North West. Tharisa also owns Karo Platinum, a low-cost, open-pit PGM asset under construction and located on the Great Dyke in Zimbabwe.

Its shares had risen marginally on Wednesday morning but have fallen almost 14% in the year to date.

“The unique co-product model was again highlighted with the company benefitting from continued favourable chrome pricing while dealing with PGM pricing pressures, resulting in strong free cash generation,” CEO Phoevos Pouroulis said in the update.

“At Karo, we remain on track with project construction, completing our first concrete pour in June, with pilot mining having commenced,” he added. – news24.com