South Africa-based miner Tharisa announced on Thursday record output of chrome and platinum group metals and unveiled 2020 goals on further increases, but said it was also seeking to diversify into electric vehicle minerals.
Platinum prices have come under pressure from expectations of a shift away from diesel vehicles, which require platinum to reduce emissions, towards petrol, hybrid or electric cars.
Tharisa shares in Johannesburg fell 4.5% after analysts said on Thursday’s results were in line. The share spiked higher earlier this month after Tharisa announced expected earnings per share.
Chief executive officer Phoevos Pouroulis said the company, which is also listed in London, was seeking commodities likely to be in short supply, such as lithium, cobalt, copper and manganese, all of which could see increased demand from a higher take-up of electric vehicles (EVs).
“We’re looking at diversification,” Pourolulis said in an interview. “We like EV raw materials. We’re looking at a broad range of commodities that might be in (supply) deficit.”
The company, which in 2016 was the first new mining listing on the main London Stock Exchange after the commodity crash of 2015 and early 2016, has a business model that has generated profits even when chrome and platinum prices are weak because its open pit operations have very low costs.
Global prices of ferrochrome, used to make stainless steel, have weakened in response to lower demand from stainless steel mills in top producer China, according to traders in Asia and Europe.
Since September, platinum has maintained a historically unusual discount to its sister metal palladium, which is favoured for reducing emissions in gasoline as opposed to diesel cars.
Cheaper platinum was offset as Tharisa’s basket of commodities includes around 16 percent palladium, compared with 55% platinum.
Some in the industry have called for producers to curb output of platinum and chrome to support prices, but Tharisa plans to expand to 2 million tonnes of chrome concentrate and 200 000 ounces of platinum group minerals by 2020.
That compares with around 1.3 million tonnes of chrome and 143 600 ounces of platinum group metals now, which is already the most Tharisa has produced.
Tharisa is also seeking to reduce its debt to equity ratio to 15% from just over 18% now, after the purchase of trucks and drilling equipment at the end of September.
BMO Capital Markets reiterated its outperform rating, citing the potential for growth.