Northam Platinum: Despite better PGM prices the outlook remains uncertain
Northam Platinum: Despite better PGM prices the outlook remains uncertainNortham Platinum says the current outlook for global PGM demand and supply remains uncertain, which in turn results in an uncertain outlook for PGM prices. Commodity markets are known for their cyclicality. A raft of global geopolitical and macro-economic issues have the potential to cause further disruption to the PGM markets and metal prices, whilst the possibility of Eskom load curtailment events and interruptions in water supply could lead to additional operational disruption and challenges.
Northam Platinum continues to monitor the market and is confident that its recently commissioned, additional on-demand self-generation capacity units at all its operations will significantly contribute towards mitigating risks associated with load curtailment events, in addition to the ongoing efforts and initiatives to increase water recycling and the availability of supplementary water supplies.
Despite the increase in PGM prices after year-end, the low PGM price environment is constraining earnings across the entire PGM sector. The sector’s ability to respond to lower PGM prices by suspending or reducing costs is limited, as the majority of mining costs are fixed in nature. This is consequently constraining cash generation across the sector, requiring ever more prudent management of liquidity.
In light of prevailing PGM market uncertainty, Northam remains internally focussed with full emphasis on operational excellence, particularly surrounding safe, sustainable production and efficient mining at the right cost.
Despite recent improvements in metal prices being realised, the global economic outlook remains uncertain, with potentially volatile metal markets and exchange rates.
Northam’s relative position in the industry, and the ability to retain operational flexibility and balance sheet strength, remain our key differentiators. The group remains committed to the strategic goal of growing safe and sustainable production down the sector cost curve.
