Editor's Note: For a more up-to-date report on the surging market of platinum, my colleague and metals expert, Christian DeHaemer recently published his reasons why there is so much love for platinum. Click here to read...
Author and Editor, Wealth Daily
Platinum is extremely rare, occurring at only 0.003 parts per billion in the Earth's crust. This makes the most precious of all precious metals about 30 times rarer than gold. In fact, it's so rare that if all the platinum in the world was poured into one Olympic-size swimming pool it would scarcely be deep enough to cover your ankles.
Unlike most other commodity metals, which are found commonly throughout the world, major platinum deposits are limited to two main areas: Africa and the Commonwealth of Independent States (the former USSR).
South Africa is by far the most prominent platinum-rich regions in the world. The country accounts for approximately 80% of the world's total annual platinum production and contains an estimated 88% of the world's platinum reserves, with a proved and probable reserve of 6,223 tons, or 223 million ounces.
There are other platinum deposits throughout Africa, including in Zimbabwe, where a significant potential source of platinum has been well-known for several decades, but it isn't until now that platinum mining companies are starting to make real progress.
Platinum Mining Companies: Tapping Into the Great Dyke
The Great Dyke is a 2.6 billion-year-old geological feature that runs right through the heart of Zimbabwe for about 550 kilometers in a north-south direction. The geologist and explorer Dr. Carl Mauch first recorded the Great Dyke in 1867, but it wasn't until the early 20th century that the presence of platinum, and other minerals, was discovered.
Early attempts at mining the platinum out of the ground were generally unsuccessful, and it has only been relatively recently that platinum production has reached significant levels.
Zimbabwe Platinum Mines
Zimbabwe's oldest platinum operation is the Mimosa mine, located in the southern part of the Great Dyke on the Wedza geological complex. Ownership of the mine is currently split 50/50 between Impala Platinum Holdings Ltd. (JNB: IMP, OTCBB: IMPUY) and Aquarius Platinum Ltd. (ASX: AQP, LON: AQP, OTCBB: AQPBF, JNB: AQP).
Platinum mining at the Mimosa complex has a long history. The deposit was exploited briefly in the 1920s, and trial mining was undertaken by Union Carbide Zimbabwe (private) between 1966 and 1975.
Zimasco Ltd. (a private ferrochrome mining and smelting company) took over the Mimosa operations in 1992. The pilot plant was refurbished, and mining recommenced in 1994, gradually building up to a rate of just under 30,000 tonnes of ore per month. Although small, the operation was very successful, and began to attract the attention of the South African platinum producers.
A proposed acquisition of the complex by Anglo American Plc (NASDAQ: AAUK, LON: AAL, NAM: ANM, JNB: AGL) collapsed in 2000. The following year Impala Platinum acquired a 35% stake in the mine. In 2002 Impala took a further 15%, with Aquarius Platinum taking the remaining 50% of the company.
Since 2002, output at Mimosa has gradually been expanded, and the mine, which is among the lowest-cost platinum producers in the world, extracts around 85,000 ounces of platinum annually.
During the early 1990s, a second mine, the Hartley Platinum project, was developed by a joint venture between the Australian companies BHP Billiton Ltd. (NYSE: BHP, ASX: BHP, LON: BLT, JNB: BIL) and Delta Gold Ltd (now a part of Zimplats). It opened in 1995, but following a string of geological and metallurgical problems, underground operations were suspended in June 1999.
BHP's interest in Hartley Platinum was sold to Zimplats Holdings Ltd. (ASX: ZIM), a spin-off of Delta Gold's platinum assets, which began to develop a new open-cast mine further south, at Ngezi. Operations began in 2001, following the acquisition of a share of the project by Impala Platinum and the South African bank Absa Bank Ltd. Over the next two years, Impala increased its holding in Zimplats, and by June 2006 it held 86.9% of the company.
In 2006, Ngezi produced about 90,000 ounces of platinum, from an open pit and from a newly-developed underground section. Impala now plans to increase production to over 150,000 ounces of platinum per annum, which will involved the construction of two new underground sections and will cost an estimated US$258 million.
A third platinum mine, Anglo American's Unki project, is expected to begin producing 58,000 ounces per year of refined platinum by 2010. Anglo American recently said that they plan to invest $400 million to build the mine despite pressure from the British government to withdraw from the country. Zimbabwe president Robert Mugabe has been condemned over violence against the political opposition ahead of the second round of presidential elections. The $400 million investment would be the largest foreign investment in Zimbabwe ever.
Until next time,