Return of Amplats is a triumph for new CEO
The importance of the return of Anglo American Platinum (Amplats) to refining platinum group metals (PGMs) cannot be underestimated. It is the second-largest supplier of these six metals, which are largely used in industrial applications, the largest of which is to filter out noxious gases from vehicle engines.
In March, Amplats, an 80%held Anglo American subsidiary, notified the market that it had stopped refining metal due to two broken plants that feed material into the refineries. The breakdown will result in up to 900,000oz of PGMs not reaching the market. Total mined supply is 13.5-million ounces for platinum, palladium and rhodium, the three main PGMs.
It’s a sizeable chunk of the world supply that will not come to the market.
For Amplats, the return of the converter plant that feeds the refineries is a welcome development. It will reach steady state by May 12, two weeks ahead of schedule and at a cost of R150m, the lower end of the estimate.
It speaks volumes of the leadership brought by new CEO Natascha Viljoen, a processing expert, that the project has been so neatly delivered under such difficult circumstances.
But for other suppliers, Amplats coming to the market with its low-cost production is hardly the best news when demand and prices are slack.
VODACOM
Vodacom has become the first major network operator to roll out a commercial 5G service in SA. Apart from better internet speeds for customers, it means the 5G arms race has officially begun. But to what extent?
The market is probably waiting for a response from MTN and Telkom, with Rain having launched its own service recently.
What will be interesting to see in the next months is what effect 5G will have on investment in the local telecom sector.
How much money can operators really commit to 5G now?
Vodacom and MTN spend about R10bn each year expanding their networks.
Given the increased number of base stations and nodes needed for 5G, rolling out such networks will be capital intensive. With Covid-19 with us for the foreseeable future, operators that recently received temporary spectrum allocations are faced with a difficult choice: roll out the latest technology or ensure those areas with little, weak or no coverage have better connectivity.
Operators have already said they are investing in ensuring their existing networks can cope with increased demand for communication services and are stockpiling network equipment to guard against global supply risks. This exercise has already cost MTN more than R4bn.
With the Treasury projecting a 6% economic contraction for 2020, revenues for operators are likely to come under pressure, another deterrent to spending capital reserves.
The other issue is, how many people will be able to actually use these services?
For now, the market is small. Vodacom service, for example, is only in three cities and there are only a handful of fixed and mobile devices that support the technology.
The 5G technology is definitely good for moving SA forward in the digital revolution, but with Covid-19 a present reality, perhaps investment may be better spent elsewhere.