JOHANNESBURG (miningweekly.com) – Prompted by a deteriorating platinum-group metals (PGMs) pricing environment and associated industry cost escalations, a detailed strategic review by Royal Bafokeng Platinum (RBPlat) of its operating activities and long-term capital expenditure (capex) commitments has led the miner to reduce its overall capex budget for its platinum projects by R750-million.

The miner narrowed the budgeted capex for the Styldrift I project from R11.4-billion to R11-billion and reduced the Bafokeng Rasimone Platinum Mine joint venture (BRPM JV) capex budget by R350-million, resulting in the combined reduction of R750-million.  

This followed an announcement by the platinum developer, in June, that it had introduced cash preservation measures in response to the difficult market conditions, at the time characterised by softening PGM prices as a result of weaker demand for the precious metals, particularly from Europe, as well as local cost pressures.

To this end, the JSE-listed company identified opportunities to defer expenditure in the short- to medium-term on certain noncritical items without any material negative impact on the business.

These included the deferment of exploration drilling at BRPM and Styldrift II, reducing capex by R71.7-million; the deferment of construction of a chairlift at BRPM’s south shaft, saving R90.7-million; and the deferment of BRPM’s concentrator upgrade, representing a saving of R300-million.           

The company thereafter advised at its interim results presentation, in August, that it had resolved to upgrade and expand the existing concentrator plant at BRPM, increasing its initially targeted upgraded concentrator capacity from 250 000 t/m to 350 000 t/m.

“This solution supports the company’s intent of maximising the commercial strength inherent in its Merensky value chain, and will minimise the required stockpiling of ore during the Styldrift ramp-up phase.

“Merensky output at BRPM is anticipated to reduce beyond 2018, owing to the depletion of Merensky reserves at south shaft,” the company said in a statement on Tuesday.

The expanded concentrator capacity would allow the BRPM JV to treat all the Merensky ore from BRPM, expected to be 120 000 t/m, and Styldrift I, with an output of 230 000 t/m, together with limited quantities of upper group two (UG2) ore.

Excess UG2 ore would continue to be toll treated at Anglo American Platinum’s Waterval concentrator plant while “sufficient” flexibility had been built into the processing solution to allow for further upgrades or expansion to also process the UG2 ore should market conditions allow.

The cost of the upgrade and expansion of the existing concentrator plant at BRPM was estimated at R2-billion.

STYLDRIFT

Meanwhile, in recognition of its long-term objective of Styldrift being an owner-operated operation, RBPlat has initiated a local skills development programme in partnership with the Sandvik training academy, in Rustenburg, to train 360 local community members in operator and maintenance skills.  

During ramp-up, management anticipated that there would be significant pressure to rapidly deploy a large number of skilled and experienced teams owing to the mechanised nature of the mine and the aggressive ramp-up schedule.

“Contract mining during ramp-up will provide a higher degree of certainty with regard to performance and costs, and an improvement on the efficiencies of the project and, consequently, the company has elected to employ a contractor-operated model for mining and construction activities during the ramp-up phase at Styldrift,” the miner noted.

The use of contractors in the mine development and stoping environment was expected to not only afford the mine the best opportunity to meet its ramp-up schedule, but also to develop its own long-term skills and systems, while still meeting the ramp-up requirements. 

“After a thorough and comprehensive adjudication process, the company has selected Aveng Mining Shafts and Underground, a division of Aveng Africa, as preferred mining contractor for the Styldrift project for a contract duration of 36 months,” RBPlat stated.

Final contract negotiations and the conclusion of legal agreements were expected to be completed by the end of the first quarter of 2014, with ongoing project optimisation prior to mining operations to start in July 2015.