Friedland opens $2B Platreef mine in South Africa

Billionaire Robert Friedland’s Ivanhoe Mines (TSX: IVN) has cut the ribbon on its long-awaited Platreef platinum mine, with South African President Cyril Ramaphosa presiding as Johannesburg hosts G20 delegations this week.

The opening caps a 37-year effort at what Friedland calls “the world’s largest undeveloped precious-metals mine.”

Ivanhoe fed first ore to the $2 billion project’s stage-one concentrator on Oct. 29 and produced first concentrate during the ceremony Tuesday, with ramp-up now underway. A second stage is already in development and a third expansion is to follow once the mine is established.

“The Platreef mine will be a major contributor to South Africa’s ongoing industrial advancement,” Friedland said Tuesday in a release.

Production

Platreef, located 270 km northeast of Johannesburg, is to produce platinum-palladium-rhodium-gold producer with meaningful nickel and copper credits. The initial operation is to produce about 100,000 oz. of platinum group metals pus gold. The latest economic studies outline after-tax net present value (8% discount) of $1.4 billion and an internal rate of return of 20%, rising to an NPV of $3.2 billion and an IRR pf 25% as the operation scales.

The mine sits on the thick Flatreef orebody – 18 to 26 metres true thickness – amenable to mechanized bulk mining methods and designed to be a low-cost, multi-decade operation. Ivanhoe and partners hold 64% of the South African operating company, with 26% owned by broad-based Black economic empowerment partners and 10% by a Japanese consortium led by Itochu. Ivanhoe bills Platreef as on track to be one of the largest and lowest-cost primary PGM producers as the project scales.

Ivanhoe shares trading in Toronto on Wednesday gained 2.9% to C$12.52, after losing 32% in value over the past 12 months. It has a market capitalization of C$17.8 billion ($12.7 billion).

South Africa

The Platreef launch comes with South Africa’s political and social complexities. Local residents picketed the opening over jobs and community benefits, even as Ivanhoe said the mine employs more than 2,000 people from nearby communities, the Globe and Mail reported.

The project was originally supposed to start producing around 2019–2020. Ramaphosa used to have a seat on Ivanhoe’s board before joining the top ranks of the ruling African National Congress. The leader’s former company role invites extra scrutiny on influence and community benefits, while past delays raise questions about timeline discipline heading into the planned expansions.

Platinum surplus

The new mine arrives as the World Platinum Investment Council (WPIC) this week forecast the platinum market to show a 20,000-oz. surplus in 2026 after a 692,000-oz. deficit this year. The council predicts stronger recycling and some profit-taking from exchange-traded funds. WPIC’s tables point to total supply rising about 4% next year, including a 2% lift in mined output, while total demand could contract about 6% from current levels.

In the three months ended Sept. 30, platinum demand jumped about 28% year-on-year while supply was flat, according to WPIC, highlighting a recent squeeze. Platinum traded around $1,535 per oz. on Tuesday, roughly 58% higher than a year earlier.