Markets seemed to reward miner Tharisa today despite what on the face of it looked like a poor set of results as the company worked to reconfigure a mine and battled South African power shortages.
Production of platinum-group metals (PGMs), which include rhodium and palladium, dropped 12.2 per cent to 67,600 ounces in the first six months of the financial year.
Meanwhile, chrome concentrate output fell 16.2 per cent to 614,100 tonnes, and revenue dipped 16.4 per cent to $166.5m (£129m).
Profit before tax fell by 72.6 per cent to $10m, the company revealed.
Why it’s interesting
Tharisa is working towards a 2020 vision, reforming and reconfiguring its open pit mine in South Africa in a bid to increase production and meet high demand.
On top of this – although the company would not reveal specifics of how much it impacted production – so-called load shedding in South Africa has forced temporary closure of some operations.
Falling output from ageing coal-fired power stations has forced South African state power company Eskom, one of the biggest in the world, to force customers to reduce electricity consumption.
The load shedding, an attempt to avoid blackouts, became an important political football in the country’s recent elections.
Chief executive Phoevos Pouroulis told City A.M. that Tharisa has managed to keep operating as usual at so-called stage three load shedding, which force it to reduce electricity use by 15 per cent.
However, stage four load shedding, which requires a 20 per cent reduction, caused it to shut down one of two processing plants.
“We took the decision to acquire diesel generation capacity, so that any event that we experience stage four, we can operate in an effective and efficient manner,” Pouroulis said.
Blackouts have also hit miners in Zimbabwe where power cuts have last up to eight hours, hitting local mines.
It comes after output fell at the country’s old coal plants and its largest hydro energy producer.
In a bid to sure up its energy usage in the country where it is developing a platinum mine, Tharisa’s local partner Karo is building a 300 megawatt solar plant, which will also be able to sell energy back into the grid.
Shares ticked up by just under a per cent to 107.5p.
What Tharisa said
“If one looks at the numbers, it looks as though there’s been a drop in productivity, which is, in part, expected and part of the plan in terms of us reforming and reconfiguring the open pit so as to meet the increased volumes so that we can achieve our vision 2020 targets,” Pouroulis said.