This Coming Development Could Trash The Platinum Cost Curve

Upheaval going on in the platinum space right now. With big fluctuations in the South African rand threatening to take down prices across the platinum group metals complex. 

That trend kicked off when the South African government fired its finance minister last week. A move that caused an 11% fall in the rand against the dollar since March 26 — and has potentially deflated the U.S. dollar cost base for South Africa’s platinum miners. 

And now, it looks like an even more disruptive wave may be breaking on the platinum sector. 

That’s a new processing technology unveiled by mining fund Pallinghurst Resources. With the group saying the new tech is almost ready for primetime — and that it will shake the foundations for costs in the platinum sector. 

Pallinghurst’s CEO Arné Frandsen announced that a bankable feasibility study has been completed on the “Kell Platinum Beneficiation Technology”. A new way to treat platinum ores, which uses a chemically-based leach process to replace traditional refining and smelting. 

The idea of alternative processing for platinum isn’t new. With a number of alternative techniques proposed over the years to replace high-cost smelting in the industry. 

But none of those made it through the rigours of a full feasibility study — which has reportedly taken Pallinghurst five years to complete. With the fund saying that two pilot plants have been running using the tech, with “no fatal flaws in the process.”

Pallinghurst said it now plans to deploy the Kell technology commercially, at its Sedibelo mine in South Africa. And the results from this final step could be gamechanging for the industry — with the group forecasting the technology will cut electricity used in processing by a full 80%. 

That would mean dramatically lower operating costs. And that’s not the only cost saving — with Pallinghurst also saying the capital costs of the Kell processing units are one-tenth that of a normal platinum smelter/refinery. 

If those claims are true — which the roll-out at the Sedibelo mine will soon demonstrate — it would absolutely crush the cost curve for South African and global platinum production. Miners would be profitable at much lower prices than we’re seeing today, potentially leading to deflation in platinum and palladium. 

It’s not a given yet, but this is a development everyone in precious metals should be watching. Keep an eye out for a timeline from Pallinghurst on first results from the commercial tests. 

Here’s to something completely different,

Dave Forest

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