Power cuts drag down Amplats output

Anglo American Platinum (Amplats) on Tuesday posted a 13% drop in first-quarter platinum group metal (PGM) output thanks to power cuts and plant downtime.

Its JSE share price fell 4%, the most in nearly a month, to R1,055.56 by early afternoon, but was still up 6% over the past month in line with the recent pickup in PGM prices.

Amplats said its refined PGM output fell to 626,000oz from 718,500oz in the first quarter of 2022, due partly to power cuts which affected 13 days of production and the equivalent of 26,500 PGM ounces.

Refined output was also affected by the Polokwane smelter where the ramp-up was completed only at the end of January after its rebuild in 2022. The smelter was at full capacity in the matching first quarter of that year.

The miner warned previously that SA’s electricity crisis, blamed on frequent breakdowns of its ageing coal-fired plants, could see its PGM output down as much as 5% this year, tightening global supplies.

The platinum market is forecast to be in deficit in 2023 after two successive years of significant surpluses, according to the World Platinum Investment Council. In its March report, it forecast a deficit of 556,000oz in 2023 due to a strong demand/supply imbalance.

Amplats maintained its forecast for 2023 refined PGM production at 3.6-million to 4-million ounces, but said this was subject to power supply.

“The first-quarter performance is lower than that of the same period in 2022 but aligned with what we guided previously, with own-managed mines PGM production 5% lower,” said outgoing CEO Natascha Viljoen.

Eskom has said rolling blackouts will be a reality for at least two years. So far in 2023, the country has largely been moving between stages 3 and 6, raising fear of the crisis getting worse in winter, when demand could exceed supply by far.

But Amplats and other miners are procuring their own energy. Amplats is developing large-scale solar PV projects for its sites as part of Anglo American’s strategy to provide up to 5GW of renewable energy by 2030.

An estimated 6,500MW of embedded energy projects are in the pipeline, according to the Minerals Council SA, which represents the mining groups.