South Africa-based Northam Platinum has signed a 20-year agreement to extend its cooperation with Germany-based technology group Heraeus.

As part of this agreement, Germany-based Heraeus will refine Northam’s platinum group metal (PGM) ore concentrates in its refinery at Port Elisabeth in South Africa and Hanau in Germany.

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The company will also buy up to 40% of the refined precious metals from Northam.

Heraeus will provide about R300m ($22m) for extending the capacity of Northam’s existing smelter with the construction of a 20MW second furnace at the Zondereinde metallurgical complex.

"The addition of a second furnace at the Zondereinde division is a critical element of Northam’s strategic growth."

The furnace is expected to be commissioned by the end of 2017.

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According to Northam, the expansion will involve a total cost of R750m ($55m).

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Heraeus CEO Jan Rinnert said: "This agreement underlines our growth aspiration and will allow Heraeus to secure precious group metals for its customers and for our own products alike."

Northam said that the agreement also provides for the renewal of the existing offtake and toll refining agreements with Heraeus for a period of 20 years.

Northam Platinum chief executive Paul Dunne said: "The addition of a second furnace at the Zondereinde division is a critical element of Northam’s strategic growth: it supports the expansion programme at Booysendal and the increased UG2 mining at Zondereinde and will immediately raise the group’s processing capacity to more than one million PGM ounces.

"In addition, it reduces operational risk, while providing headroom for third-party concentrate purchases and toll treatment arrangements."