Africa’s cabinet has welcomed the Kingdom of Saudi Arabia’s announcement to invest approximately R9.5b in building a platinum group metals (PGM) smelter and base metals refinery (BMR) in the Waterberg region of Limpopo.

This project is expected to significantly impact the region’s economy, particularly Polokwane, the area’s economic hub.

Minister in the Presidency Khumbudzo Ntshavheni in December spoke to the media about the outcomes of the recent cabinet meeting, and stated that the investment from its fellow BRICS+ member ‘is a strong vote of confidence in our nation’.

Ntshavheni highlighted that it ‘builds on the first phase of our investment mobilisation drive under the Sixth Administration that saw our nation surpassing its investment target by 26% to reach a total of R1.51t in investment pledges’.

She added: “South Africa is now targeting R2t in new investments over another five-year period between 2023 and 2028.”

The Kingdom of Saudi Arabia’s Ministry of Investment (Misa) and Ajlan & Bros Company for Mining (a subsidiary of Saudi-based Ajlan & Bros Holding) announced that a memorandum of understanding (MOU) had been signed to develop PGM smelters and base metals refineries.

According to the MOU, Misa will provide strategic guidance and financial support for the proposed PGM smelter and BMR in Saudi Arabia and the Waterberg project in South Africa.

This initiative will include Platinum Group Metals Ltd, the operator and majority owner of the platinum-rich Waterberg Project, a bulk underground palladium and platinum deposit in Limpopo.

Platinum currently operates three mining operations in the Bushveld Complex: Mogalakwena mine, Amandelbult complex (comprising Dishaba and Tumela mines), and Mototolo mine.

The smelter and refinery are still in the planning stages. Construction is projected to start in December next year, with first production anticipated by September 2029. An agreement reached in 2023 between Misa and Ajlan & Bros outlined plans in three phases: a global market study, a definitive feasibility study (Smelter DFS) for the smelter’s construction and operation, and an option to form a 50:50 joint venture after completing the Smelter DFS.

The Waterberg Project boasts attractive characteristics as a low-cost, shallow, bulk-mineable operation with significant scale and growth potential. Sixty-three percent of the Waterberg reserves and resources of PGMs are palladium, a metal enjoying strong market support due to auto industry preferences.