Amplats to spend up to R800m on fixing plants to restore PGM supply
The world number two PGMs miner sees no disruptions to spares to fix broken plants that have taken 900,000oz of metals out of the market
Anglo American Platinum foresees no disruptions in sourcing spares to repair two converter plants to restore platinum group metal (PGM) supplies to the market after declaring force majeure.
The project will cost between R650m to R800m.
The Anglo American 80%-held subsidiary activated clauses in PGM supply contracts and with mining companies selling it concentrate, to notify them of a failure of the two plants in quick succession that halted refining of the metals.
An explosion in February at the first converter, which readies matte from Amplats’s four smelters by stripping out iron ahead of the refining processes, and then inexplicable water ingress at the second standby converter plant in March, prompted the force majeure declaration on March 6.
Amplats lowered its refined metal output forecast for 2020 by 900,000oz of platinum, palladium, rhodium, ruthenium, osmium and gold for 2020, representing about a fifth of its annual output.
The suspension of metal supply from Amplats has come as prices for PGMs plummet over concern about demand from vehicle makers needing the metals in their antipollution devices, as the global economy reels under the effect of the Covid-19 viral outbreak.
Amplats plans to take parts from the first converter, which will take between R500m and R600m to repair by the first quarter of 2021, to fix the second converter.
The second converter will cost between R150m and R200m to repair over 80 days, with a target of May 25 to return to operations and supply the refineries.
“The repair team is on site executing the work, and a full investigation is under way to understand the cause and nature of the water ingress into the furnace,” Amplats said, noting that a “majority of the replacement equipment” could be found in the first converter or in its spares inventory.
“All procurement of additional equipment is from within SA, so no supply chain disruptions are anticipated,” it said, addressing concerns around disruptions caused by Covid-19 to imports from other countries.
Sibanye-Stillwater, the world’s largest source of PGMs, has opted to move all refining of its Rustenburg material that was being toll treated at Amplats to its half-full Marikana metal processing complex. It will retain its smelting contract with Amplats.
Royal Bafokeng Platinum (RBPlat) said on Wednesday it had reached agreement in principle with Amplats around the purchase of concentrate contract, with a substantial payment made on delivering and the balance of payments made at a later date.