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Ivanhoe Mines and chairman Robert Friedland certainly received some welcome news Wednesday morning. Although the company made headlines last month due to controversy and delays surrounding its massive Platreef project, Ivanhoe has now received final approval for its mining right from South Africa’s Department of Mineral Resources.
With the department’s final approval, the mining right has been formally activated, and Ivanhoe may move forward with construction and development at the project. The right will last for an initial period of 30 years, and may be extended for further 30-year periods in the future.
Friedland said, “[w]ith the shared, ongoing commitments of the Department of Mineral Resources, our Broad-Based, Black Economic Empowerment partners and our supportive co-investors from the Japanese trade and industry consortium, Ivanhoe Mines’ Platreef Project is going to become a sustaining foundation of jobs and support serving the common interests of our host communities in Limpopo province.”
The $1.6-billion Platreef mine is slated to be one of the biggest platinum mines in the world and the lowest-cost producer of platinum-group metals (PGM) in Africa. Platreef will use mechanized operations, which have not been a viable option for other miners operating in South Africa’s Bushveld Complex.
Controversy abated
Work at the South African PGM project has been suspended since May 26 pending final approval for the mining right, and on October 8 Bloomberg drew attention to some community activists taking issue with the project. Among other things, the protesters were concerned with some aspects of a sale of a 20-percent stake in Platreef to people living in the local Mokopane area. The stake was sold as part of a governmental black economic empowerment program intended to redress the effects of apartheid.
Ivanhoe responded to that article at the time, stating that it had held over 150 meetings over the past year and a half and noting that despite some opposition to the project, the “overwhelming majority of residents in the Platreef Project’s host communities are supportive of the planned development.”
Issues were raised again on October 31 when Bloomberg reported that South Africa’s Department of Mineral Resources had suggested some of Ivanhoe’s plans to help local communities were “sketchy” and did “not offer much.” The department stated it was “duty bound” to listen to concerns from local communities, and suggested it might dig deeper before giving final approval.
However, just five days later the project was approved, and comments from Minister of Mineral Resources Advocate Ngoako Ramatlhodi indicate ministry support for Platreef. He stated, “we are pleased that the Platreef Project will indeed satisfy the environmental, socio-economic as well as Black Economic Empowerment requirements as set out in the law. We look forward to a constructive partnership on this project between Ivanhoe Mines, the South African government, communities and workers.”
Ivanplats has already dropped plans to cut jobs at Platreef, which it was considering in light of indefinite project delays.
What’s next?
As of Tuesday, Ivanhoe had lost nearly 60 percent of its share price since reaching a 2014 high of $1.98 at the beginning of May. However, with construction at its soon-to-be massive PGM mine now set to move forward, things could be looking up for the company.
Shares of Ivanhoe touched $0.97 during morning trading hours, and the company closed at $0.90, up 11 percent from yesterday’s close. Trading volumes were also around twice the daily average for Ivanhoe.
While there’s no doubt that many miners and commodities — including platinum and palladium — have been suffering lately, it’s encouraging to see a developer putting out some positive news. Investors will no doubt be watching as Ivanhoe prepares to begin construction at Platreef. Currently, the company is resuming preparations for continued construction at the project.
Securities Disclosure: I, Teresa Matich, hold no investment interest in any companies mentioned.
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