Northam Platinum’s Earnings Drop Amid Weak PGM Prices, Market Reacts

Northam Platinum reported a nearly 50% drop in earnings for the six months ending December 31, 2024, as lower platinum group metals (PGM) prices weighed on performance. Headline earnings declined by 49.7% to R238.24 million, prompting an 85% cut in the interim dividend to 15 cents per share.

Despite CEO Paul Dunne’s assurance that the company is positioned for future growth, market reaction was negative. Northam’s shares fell 4.28% to R96.79 on the JSE, while Anglo American Platinum and Impala Platinum also saw declines of 4.73% and 3.81%, respectively.

Revenue fell 3.1% year-on-year to R14.5 billion, pressured by an average PGM basket price of R32,000 per 4E ounce. Meanwhile, the cost of sales increased by 6.9% to R13.4 billion, driving operating profit down to R1.1 billion from R2.4 billion. EBITDA dropped from R3.2 billion to R1.8 billion.

Despite the downturn, Northam increased output across its Zondereinde, Booysendal, and Eland mines, improving efficiency and investing in sustainable energy. Production of refined 4E metals rose 3.7% to 451,213 ounces, while chrome concentrate output climbed 7.5% to 716,622 tons.

Dunne highlighted continued investment in projects like the 3 Shaft development at Zondereinde, expected to complete in 2026. He emphasized that Northam remains well-positioned for a market recovery and forecasted a platinum deficit of 1 million ounces in 2025, citing declining South African production and stable industrial demand.

Northam has also outlined five sustainability strategies for long-term growth. By 2027, renewable energy is expected to cut electricity costs by 25%, with solar and wind projects supplying 60% of power needs. Additional initiatives include increased chrome yields, milling excess UG2 at Eland, leveraging procurement efficiencies, and optimizing contractor headcounts to manage costs post-expansion.

Dunne dismissed concerns over potential U.S. tariffs on PGMs, citing South Africa’s dominance in global platinum reserves. He also noted that while skilled labor is being recruited by competitors, Northam’s succession planning has mitigated disruptions.