Karo Platinum navigates low-price market for PGM
Tharisa Capital continues to evaluate value engineering opportunities for its Karo project in Zimbabwe, as the platinum group metals (PGM) industry faces a difficult period due to low global prices.
Value engineering is a systematic approach to analysing a product or project design to identify ways to achieve the necessary functions at the lowest possible cost, often by substituting materials and methods with less expensive alternatives without compromising quality or functionality.
The project, like many others globally, has been affected by low PGM prices due to weak demand, resulting in several mines cutting employment and putting on hold new and expansion projects.
In a production update for the first quarter of financial year 2025, the South African mining group said that PGM prices averaged US$1,381 per ounce (oz) compared to the fourth quarter of FY 2024 (US$1,370/oz).
Tharisa said the prices remained subdued despite continued forecasts for deficits in the various PGMs.
“The price weakness is compounded by a visible lack of investor interest, despite the supply-demand evidence.
“The low pricing environment will lead to growing deficits as output continues to decline, particularly in marginal deep-level mines, with capital spending constrained,” said Tharisa chief executive Mr Phoevos Pouroulis.
During the year ended September 30, 2024, the development of the Karo Platinum project was slowed down due to a delay in funding workstreams because of the unfavourable PGMs market conditions.
First ore in mill (FOIM) is now planned for the second half of 2026, whilst the project workstreams have been divided into smaller commitments to ensure continued development aligned with funding availability.
“The PGMs’ price environment necessitated a review of the commissioning timeline. Negotiations for funding have been positive and are now at an advanced stage, with the group in possession of term sheets received from financiers, which it is currently assessing, while smaller work packages on the project are being completed,” Karo Holdings said in its financials.
The Karo Platinum project is an open-pit PGM asset under construction, located on the Great Dyke in Zimbabwe.
Tharisa holds 76,66 percent in Karo Mining, and with a commitment to provide further equity capital, Tharisa intends to increase its shareholding in Karo Mining to 80 percent.
Construction at the Karo Platinum project officially commenced on December 7, 2022, and development continues steadily, with value engineering, mining, and process optimisation running parallel.
During the year to September 30, 2024, group revenue increased by 11 percent to US$4721,4 million compared to US$649,9 million in 2023, remaining resilient against the 28.1 percent decline in PGM prices and benefitting from robust chrome sales volumes with an uptick of 13,6 percent in chrome prices.
Other operating expenses increased by 15,9 percent to US$66,6 million from US$57,4 million in 2023.
The group said the largest cost component of other operating expenses was employee-related expenses of US$33,7 million, which accounted for 50,7 percent of total expenses.
Tharisa said total capital expenditure and commitments amounted to US$195,0 million, and of the total capital spent, US$24,2 million pertained to the mining fleet and US$164,0 million related to other mining assets.-heral
