The initial phase of Eastplats’ Zandfontein underground section at the Crocodile River Mine in South Africa is now operational, marking the end of the mine’s care and maintenance period since 2013. 

Since 2017, the company has been reprocessing existing tailings to recover chrome with by-product PGMs from the Zandfontein tailings storage facility. However, chrome sales are anticipated to gradually decline into 2024 as concentrates produced from its tailings project nears its exhaustion date.

The shift underground will see PGM concentrate production become the primary revenue source for Eastern Platinum’s Crocodile River asset. Initially, Zandfontein ore was designed to produce only a 4E PGM concentrate, with the potential for chrome recovery at a later stage. The PGM concentrate is part of an off-take agreement to be processed at the Impala smelter complex near Rustenburg. More recently, Eastplats has updated its plans and has incorporated UG2 chromite recovery into its Zandfontein underground operations production plans.

The South African PGM industry is currently grappling with a crisis as PGM basket prices continue to decline due to soft demand, high production costs, and logistical challenges. Many PGM producers have released results indicating a decline in headline earnings. In response to these challenges, PGM miners such as Implats, Sibanye-Stillwater, and Amplats, have implemented cost-cutting measures which will see the supply of PGMs cut back.

By-product chromite from the UG2 ore has added some support to PGM operations with chromium ore prices remaining elevated and in high demand from a resurgence in growth from the Chinese ferrochrome industry.

The underground operations at Zandfontein are looking to leverage its co-production of UG2 chromite to similarly offset the challenges faced by the declining PGM basket prices. While some decline in PGM mining is expected in South Africa this year, Project Blue understands that the focus of PGM mining will sit with UG2 ore at the expense of the Merensky Reef, which will likely see UG2 chromite supply remain largely undisturbed by the woes of the PGM industry in 2024.