Tharisa expecting to benefit from chrome price rebound

• Quiet optimism as China reopens its economy

Chrome and platinum group metals (PGMs) miner Tharisa says it is cautiously optimistic as China reopens its economy, with the group set to benefit from a rebound in chrome prices and full production at its operations in SA.

Tharisa operates a mine near Brits in the North West and has two plants to recover chrome and PGMs, Voyager and Genesis. The group has been fortunate in having an open-pit operation, CEO Phoevos Pouroulis said, being one of the first miners to benefit from easing lockdown regulations, and having already adapted to new safety protocols.

“We have been quite creative in minimising employees on site, with staggered reporting of employees for shifts, which has allowed us to increase socialdistancing,” he said. This had resulted in about 25% of labour and contractors on site at any time, but also full production, said Pouroulis.

The group also expected PGM prices to be resilient in the months ahead amid supply concerns from SA. It was also optimistic about the recent rebound in chrome and steel demand in China, which was reopening its economy and planning government stimulus.

Chrome prices recently reached $155 (R2 579) a tonne, from a first-quarter low of about $113 a tonne, said Pouroulis.

Chrome is an essential ingredient in manufacturing stainless steel. Speciality grades of chrome are used in foundries, leather tanning, wood preservatives and paints.

SA is the world’s largest source of chrome ore, the bulk of which is sold to Chinese ferrochrome plants, and is also a major supplier of ferrochrome.

PGMs have also been less affected than many other commodities by the current Covid-19 pandemic, and Tharisa is fortunate in having a relatively high production of rhodium and palladium.

The group said that data from Johnson Matthey showed an interesting dynamic, in which automotive catalyst demand was expected to fall by at least 15% to 20%, while, in parallel, PGMs supply would slow more than 20% as mines shut and network disruptions lead to a slowing in recyclable material coming back to the market.

Tharisa reported that net profit rose 45.1% to $11.9m (R214.2m) in its six months to end-March, with PGM prices 58.5% higher on average during the period.

PHOEVOS POUROULIS

Tharisa is, however, cautious about the outlook for the global economy, and general volatility, and has not given forward-looking guidance.

In morning trade on Thursday, Tharisa’s share price was unchanged at R12.01, having fallen about 24% so far in 2020.

Over the same period, the JSE’s platinum miners index has lost 12.86%.

45.1% rise in Tharisa net profit to $11.9m

24% fall in share price so far in 2020