Northam Platinum announced on Friday a strategic pause on several capital projects in response to the ongoing slump in metal prices, which significantly impacted its profitability in the first half of the year. The South African miner reported a 93% drop in profit, reflecting the broader challenges faced by the platinum group metal (PGM) producers globally.
With South Africa being a major player in the PGM market, contributing to about 70% of the world's supply, local miners including Anglo American Platinum, Impala Platinum, and Sibanye Stillwater are reevaluating their operations. These companies are taking measures such as halting projects and reducing workforce to safeguard their margins amidst the price downturn.
Northam's decision to scale back its capital expenditure aims at capital preservation during this period of market volatility. The company highlighted adjustments in its capital deployment, particularly at its Zondereinde, Booysendal, and Eland operations, where certain projects have been deferred or temporarily halted.
The decrease in PGM prices has been attributed to several factors, including diminished economic growth prospects in China and a reduction in stockpiling by manufacturers, which had previously escalated during the onset of the Ukraine conflict by Russia. Palladium and rhodium, key components in automotive emission control, have seen their prices drop significantly from their peaks in recent years.
For the six-month period ending December 31, Northam reported headline earnings per share of 1.21 rand, a stark decrease from 16.09 rand in the comparable period the previous year. Despite the financial downturn, the company has declared an interim dividend of 1 rand per share, signaling a cautious but committed approach to shareholder returns amidst challenging market conditions.
