Amplats to restart refined metal output earlier than expected

Anglo American Platinum, one of the world's biggest producers of platinum group metals (PGMs), will restart refined metal output ahead of schedule after fixing a broken plant earlier than targeted.

Amplats, which is 80% owned by diversified resources miner Anglo American, declared force majeure on supply contracts in March after its two Anglo Converter Plants (ACP) broke in quick succession. Amplats used one of the converters, with the other on standby in case there was a problem with the first.

The converter plants treat the matte material coming from the smelters, and extract iron and prepare it for the refining process where first base metals are stripped out and then gradually each of the six PGMs.

Amplats had set a return date of May 25 for one of the converters to be repaired and for refining to resume. However, the converter will be fully operational by May 12, with the repairs costing R150m, which was within the budget the company set, said new CEO Natascha Viljoen, who replaced Chris Griffith.

“The ACP and full downstream processing operations are completing a safe ramp-up and expect to be fully operational from May 12. Force majeure to suppliers of concentrate will be lifted on that date,” Viljoen said.

For customers buying metals, the force majeure terms remain in place for the immediate future. Amplats forecast that its total refined output for the year would fall by a fifth, or 900,000oz.

“Due to the time taken to refine the respective platinum group and base metals, the force majeure notice remains in effect for our refined-metal customers. Force majeure arrangements with these customers will be lifted in the future and in line with the provisions of our agreements,” Viljoen said.

Amplats had told third-party miners in SA, including Sibanye-Stillwater and Royal Bafokeng Platinum, that it could not process their concentrate, using the force majeure clause in their contracts. Force majeure is used by companies when events beyond their control mean they can no longer honour terms in their contracts.

“All temporary commercial arrangements applicable during the force majeure period will revert to normal commercial terms,” Viljoen said.

In March, when Amplats told the market of the converter failures and the stop in refined output, finance director Craig Miller said full-year earnings before interest, tax, depreciation and amortisation (ebitda) would be about R18bn lower at current spot prices than it had been planning for. Amplats posted record ebitda of R30bn in 2019.

Viljoen has built her reputation as a minerals processing expert at Lonmin, once the third-largest platinum miner, and then during her time at Anglo as head of its processing division.

Amplats had conducted “substantial testing to ensure the stability” of the converter, she said on Tuesday, stressing that all health and safety protocols to keep employees safe in the Covid-19 pandemic were strictly adhered to during the repairs.

“The company’s ability to continue these essential repairs during lockdown has been critical to the resumption of the processing pipeline,” she said.

The government enforced a national lockdown from March 27, which stopped all underground mining. Companies with opencast mines, tailings retreatment operations, smelters and refineries were able to continue limited work.

On April 18, the government eased the restrictions on mining, allowing all mines to return to 50% of capacity under strict conditions around the health and safety of mineworkers.

Amplats had continued to operate its Mogalakwena opencast mine on a limited basis during lockdown as well as its Polokwane smelter.