Shares in Anglo American Platinum (Amplats) slumped by about 2.3% in afternoon trade on the JSE yesterday after the precious metals miner said production for the 2023 first quarter to March had dropped by 6% although there was some respite from firmer recoveries and higher grades at its Zimbabwe mine.
Anglo Platinum’s stock shed 2.31% on the JSE in afternoon trade, hovering around R107.48 as investors weighed the lower production volumes against possible escalation in load shedding in the next few months.
Analysts say South Africa would likely undergo severe load shedding, “with the resultant impact harder on smelting by PGM (platinum group metal) companies” that are already taking strain.
During the quarter under review, load shedding resulted in the metal in inventory creeping up for Amplats.
“Eskom load-curtailment impacted 13 production days for the quarter, contributing to a build-up in work-in-progress inventory of 26 500 pgm ounces,” said Amplats CEO Natascha Viljoen.
Load shedding by Eskom impacted Amplats’s Polokwane and Waterval smelters, with the knock-on effects negatively impacting sales of platinum, palladium, rhodium and related metals by 13% to 698 600 ounces.
Amplats has been ramping up the Polokwane smelter while “scheduled asset integrity work at Waterval smelter and the impact of Eskom load-curtailment further impacted available smelter capacity” for the quarter
A predicted lowering in mining grades at Mogalakwena and infrastructure closures at Amandelbult in 2022 affected output from the world number one platinum miner’s own managed operations.
Production was further impacted by “unplanned extended downtime at Mogalakwena Baobab plant,” with overall output from the own managed mines take a knock by 5% to 501 700 ounces, although this was largely expected.
“The first quarter performance is lower than that the same period in … this reduction is aligned with expectation and mine sequencing was also impacted by high rainfall as well as production impacted due to extended downtime at the Mogalakwena Baobab plant,” said Viljoen.
However, she added, this lower production performance was “partially offset by a strong performance from Unki following the successful concentrator debottlenecking” at the Zimbabwean mine.
Production from Unki increased by 17% to 62 500 ounces, attributable to “improved plant stability post the debottlenecking project completed in Q4 2021 with improvements in throughput, grade” and recoveries.
Unglo Platinum’s production from joint venture operations also decreased, falling by 10% during the quarter period to March to 168 600 ounces. The Modikwa mine’s pgm production was unchanged at 68 800 ounces, while output at Kroondal fell by 16% to 99 800 ounces largely as a result of “the ramp-down at Simunye shaft and geologically challenging ground” across the complex.
For the 2023 first quarter period, the company realised an average basket price of $2 131 (R21 319) per PGM ounce, which it described as “lower” compared to the same period last year owing to “lower market prices”.
For the 2023 full year, Amplats has maintained its production and refined production guidance at 3.6 million to 4 million ounces. This is, however, dependant on the “impact of Eskom load-curtailment” while unit costs for 2023 will likely be around R16 800 to R17 800 per PGM ounce.
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