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SIMON BROWN: I’m chatting now with Phoevos Pouroulis, Tharisa’s CEO, on outcomes for the 12 months [to] finish September. Revenue up 15%, earnings per share up 44%. Phoevos, a actually good 12 months, but some challenges. The most notable, I think about, is Eskom. How are you managing [or] dealing with load shedding?
PHOEVOS POUROULIS: Thanks Simon. Always good to be with you and your listeners. Being an open-pit mine, the vast majority of our power consumption is diesel, luckily and sadly. It is a double-edged sword. So we rely on Eskom for round 25 megawatts to 30 megawatts for our processing vegetation. About three years in the past we put in 10 megawatts of standby era, which permits us to face up to what home customers kind of confer with as Level 4, Level 5 load shedding within the kind of industrial sphere. We name it curtailment. It’s a negotiated cutback.
So in impact we haven’t had any disruption as a consequence of Eskom outages. There have been some spikes and dips which do trigger points, but they haven’t affected our manufacturing and you’ll see that by the file efficiency that we’ve posted when it comes to productiveness.
SIMON BROWN: Yes, completely. A really, very sturdy 12 months when it comes to manufacturing. Guidance for the 12 months forward is kind of within the vary the place you got here in, but you make a level within the outcomes that recycling goes to be the numerous driver of [platinum group metals (PGMs)] provide and demand as a result of there’s not a heck of a lot of latest [supply] coming on. We’ll contact on Zimbabwe in a second, but it truly is as much as the recyclers.
PHOEVOS POUROULIS: Yes. Because of the kind of pent-up demand in auto cells, what’s occurring is second-hand or used automobiles aren’t being recycled or offered, because it have been, [or] trashed as quickly as they might usually [be]. So there’s additionally a bottleneck in autocats [auto catalytic converters] coming into the marketplace for PGM recycling. You are seeing pinch factors on each main provide with mining – notably in South Africa – being difficult, getting costlier with all these inflationary pressures, getting deeper underground. The common PGM mine is greater than one-and-a-half kilometres underground, and that has its personal challenges. There’s a lengthy listing of these.
So we’re seeing, notably round platinum, which is de facto a South Africa-centric provide supply, recycling is essential – taking into account that there will probably be challenges on that aspect as nicely.
SIMON BROWN: One hundred %. And one of many key issues, the PGM basket value is down within the 12 months, extra in {dollars} than in rand. The rand helped some of it, but it’s nonetheless at, frankly, massively worthwhile ranges.
PHOEVOS POUROULIS: Absolutely. If we have a look at what’s driving that, it truly is deficits nonetheless persisting in palladium and rhodium. I believe it’s universally accepted that platinum inside 18 months goes to be in the identical state of affairs for the very causes that I discussed earlier.
So we’re beginning to see that platinum value ultimately transfer by that $1 000/ozbarrier, and we expect that it ought to recognize significantly from this level after we have a look at demand-supply fundamentals.
SIMON BROWN: I discussed Zimbabwe – the Great Dyke [in the Mashonaland West District]. I used to be doing some digging over the weekend. That’s the second-largest PGM deposit on this planet. Of course, Bushveld is the most important, the Bushveld Complex [in SA]. You’ve acquired the acquisition there [in Karo Mining Holdings]. You now have the bulk stake, [with] manufacturing on the lookout for mid-2024. [The] capital necessities in that regard? There are nonetheless some, but my sense is you’ve acquired them nicely funded with money flows.
PHOEVOS POUROULIS: Part of the funding is fairness that comes from Tharisa, round a third of it, after which the steadiness is your typical undertaking finance debt, kind of debt-financed packages. So it’s all nicely on monitor. We are excited. It’s a quick timeline to productiveness – as you say round 21 months. Capital round $390 million in complete, and that features fairly a little bit of infrastructure. Remember, that is a greenfields undertaking so we’re bringing water, we’re bringing in energy, roadways and issues. So it’s very thrilling for us.
It sees us doubling our PGM output inside quick order. So very thrilling.
If we have a look at our friends, well-established producers on the Great Dyke, that are the majors, their lowest-cost PGM ounces come from the Great Dyke. So there’s a precedent, a mining legacy on the Great Dyke of profitable operations.
SIMON BROWN: Is this additionally comparatively shallow?
PHOEVOS POUROULIS: Yes, we’re beginning with an open pit. We have a 17-year open-pit phase-one life, which provides us that 190 000 ounces a 12 months. And then it’s a large land bundle. So after we have a look at section two, three, and even 4, we’d be taking a look at going underground, or [a] portal improvement shaft. So these are choices obtainable to us as we efficiently develop the primary section.
SIMON BROWN: How lengthy to ramp as much as that 190 000oz, as a result of your steering for this 12 months, for the subsequent 12 months is 175 000oz to 185 000oz. So it’s actually doubling your output.
PHOEVOS POUROULIS: Correct. So we see first ore within the mill in July 2024, [and] give ourselves six months to de-bottleneck the processing plant. I believe on an annualised foundation in calendar 12 months 2025 we must always begin seeing us attending to that run fee.
SIMON BROWN: Okay. A final query [on] chrome. Of course, the Vulcan plant is comparatively new in your life. You made the purpose that you’re supplying about 10% to 12% of China’s annual demand in chrome. Is that demand holding up? There are all kinds of challenges popping out of China, most notably zero-Covid insurance policies.
PHOEVOS POUROULIS: Absolutely. There are many blended messages, and I suppose the one which hits the headlines is the zero-Covid coverage. Demand has been sturdy. We’ve seen the value being supported. It’s at present $220/tonne at present trade charges. It’s exceptionally excessive [at] transformed rand costs for our chrome.
Most importantly, by the multi-modal export channels now we have, we’re in a position to get our product overseas and to our clients.
I believe what offers us confidence is that port shares in China are nonetheless extraordinarily low. They’re not at these peaks that we’ve seen beforehand. It signifies that it’s virtually a just-in-time mannequin, in order that they bodily want the supply of those chrome items and we haven’t seen restocking of any significance on this final 12 months or so.
The chrome value is up some 35% 12 months on 12 months, and it’s boosted our file income and revenue. Where PGM has dropped, chrome has picked up on the opposite aspect. So we’re actually happy with our monetary outcomes for the 12 months.
SIMON BROWN: That is Tharisa CEO, Phoevos Pouroulis. Phoevos, I at all times recognize the time. Really a good set of numbers there.
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