Blow for Amplats as furnace is shut

ANGLO American Platinum has lost smelting production of up to 100,000oz of platinum in 2016 after shutting down a faulty furnace at Waterval smelter for an unplanned R125m rebuild.

Amplats, the world’s largest producer of platinum that is 80%-owned by Anglo American, said on Tuesday there had been a leak at its number one furnace at Waterval at the weekend, forcing its closure. The furnace represents a fifth of the company’s smelting capacity and would reduce its refined platinum output by between 70,000oz and 100,000oz.

“A preliminary assessment of the damage to the furnace has shown that a rebuild of the furnace should be brought forward, as the most prudent means of mitigating future potential operational risks,” the company said on Tuesday. It would take up to four months to return the furnace to full capacity, it said.

All the company’s furnaces are running at full capacity.

The cost of the rebuild will push Amplats’s forecast capital expenditure in 2016 to the top end of its guided range of between R3.5bn and R4bn.

“Mining and concentrating activities are unaffected, therefore not impacting the previously guided range of produced [metal in concentrate] of 2.3-million to 2.4-million platinum ounces,” it said.

“We haven’t guided to the impact on sales yet, just the impact on refined production,” said Amplats spokeswoman Mpumi Sithole.

In the first half of the year to June 30, Amplats reported refined platinum production of 1.008-million ounces, which was 9% lower than a year earlier because of a safety shutdown at its precious metal refinery. For the whole of 2015, Amplats refined 2.459-million ounces. Amplats tapped into its inventory of finished platinum to supply the market, increasing sales 5% to 1.221-million ounces.

Amplats’s share price fell 0.7% to R402.49, extending a five-day decline of 2% for the R109bn company.