Amplats’ share price plunges on slashing annual refined output
ANGLO American Platinum (Amplats), plunged by 14.32 percent to close at R947.64 a share on the JSE on Friday after slashing its 2020 annual refined output by more than 20 percent on the decision temporarily to close its critical concentrator plant in Rustenburg to declare force majeure to customers.
The news had a knock-on effect on Amplats’ majority owner, Anglo American plc, which fell 6.27 percent on Friday to close at R345 a share.
Amplats said it would now refine 900 000 less platinum group metal (PGM) ounces in 2020 following the temporary shut down the Anglo Converter Plant (ACP), which was rocked by fire and water leaks at two of the facility’s plants.
Amplats revised its refined PGM production guidance to between 3.3 million and 3.8 million ounces from the original estimate of between 4.2 million and 4.7 million ounces.
The concentrator plant is expected to recover from the lost output within two years.
Amplats said that Phase A converter at the ACP was hit by a fire last month and was undergoing repairs, which were scheduled to be completed by the second quarter of 2021.
Following the fire, the company said it commissioned Phase B of the ACP to take over from Phase A. However, water was detected in the furnace.
“This poses a high risk of explosion, and the company has determined that it has no other option but to temporarily shut down the Phase B unit, to ensure the safety of all employees, and avoid a catastrophic event,” the company said, adding that it anticipated that the repair works to fix the Phase B unit would take 80 days.
Amplats said, as result of the temporary closure of the entire ACP, it had decided to declare force majeure to customers, suppliers of third-party purchase of concentrate and suppliers of tolling material, as it was unable to complete the processing of material during the converter repair.
Amplats said it expected R18 billion lower earnings before interest, taxes, depreciation, and amortisation.
Chief executive Chris Griffith said the company would approach its peers to see if they could lend a helping hand. Asked if the fire and water leaks were a result of underspending on capital expenditure, Griffith said this was not the case. “We do not think we have been underspending on capex; rather we have been spending more on capex smelting,” said Griffith.
Amplats informed its customers – including African Rainbow Minerals, Sibanye-Stillwater and Royal Bafokeng
Platinum – of its plight.
Sibanye-Stillwater confirmed late on Friday that Amplats had indicated that its converter plant would be unavailable for at least eight weeks, during which period the force majeure would remain in effect and it would be unable to fully process the Rustenburg, Kroondal and Platinum mile concentrate.
“Sibanye-Stillwater has significant spare PGM processing capacity at the Marikana operations and the Precious Metal Refinery in Brakpan, and will be assessing how best to utilise this capacity. We are engaging with Amplats concerning the various alternatives and will provide a further update once we have clarity,” said Sibanye-Stillwater.