Load-shedding results in Amplats losing 92,000oz of PGM output in first quarter
Based on the average price for PGMs in the three months, the unprocessed metal had a value of R1.59bn, most of which will be recouped in time
Eskom's blackouts meant Anglo American Platinum (Amplats) was unable to process 92,000oz of metal, representing about 12% of its refined production for the first quarter of 2019.
Based on the average price for platinum group metals (PGMs) in the three months, the unprocessed metal had a value of R1.59bn, most of which will be recouped in time.
The world's largest platinum miner, which is 80% owned by Anglo American, divided the 92,000oz between its concentrators, which it was unlikely to recover, and its smelters, which it could recover over time if it had uninterrupted power supply from state power utility Eskom.
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Amplats lost 18,000oz of PGMs at its concentrators to what Eskom terms load-shedding, or a reduction in power supply to avoid damaging its infrastructure. This metal was worth R311m.
A further 74,000oz of PGMs was unprocessed at its smelters. This metal, worth R1.28bn, will be processed in time and is not lost.
However, CEO Chris Griffith warned in an interview with Business Day earlier in April that if there were further power disruptions, the processing of this metal could be rolled over into 2020 and the revenue from its sale realised only then.
Amplats said separately in a first-quarter production update that its refined production had fallen by 14% to 871,200oz of PGMs compared to the same three months a year earlier.
Amplats did not put a value on the lost production nor did it break the PGMs down into their constituent parts of platinum, palladium, rhodium and other sister metals, making it difficult to measure the impact on the markets for these metals.
World mine supply of platinum is about six million ounces a year, while palladium is about 6.6-million ounces. This means the delay of 74,000oz of PGMs from Amplats and the loss of 18,000oz of PGMs will have no significant effect on prices.
Amplats said it had done maintenance work at its Waterval smelter, its converter plant, and base metals refinery, which contributed to the decline in refined output.
“There has been a further build-up in work-in-progress inventory following the impact of power disruptions, and this should be refined in full by the end of 2019. However, if power disruptions persist, there could be an impact to the timing of refining the built-up work-in-progress inventory in full,” Amplats said on Wednesday.
Looking at the processing of PGMs, mined ore is concentrated then sent to a smelter where it is converted into a PGM-rich matte, before passing into a base metals refinery to strip out metals such as nickel and copper. The remaining material is then processed in the precious-metals refinery, where the eight different metals are extracted.
Eskom struggled in February and March, cutting up to 4,000MW of electricity from the grid, affecting industrial users and households.
Sales of refined PGMs, which are used to make autocatalytic converters for petrol and diesel engines, jewellery, investment products and a host of industrial applications, fell 21% to 884,900oz for the quarter.
Amplats maintained its full year production guidance of between 4.2-million and 4.5-million ounces of PGMs.