Ralph Havenstein, CEO designate Norilsk Nickel Intl.
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» Anglo Pt considers mine shutdowns
» Anglo Platinum defends its safety efforts
» Anglo Pt cuts 2007 platinum output by 15,000 oz
» Anglo Pt pencils in spring BEE deadline

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Safety issues shrink Anglo Pt's 2007 output
Allan Seccombe
Posted: Mon, 30 Jul 2007

[miningmx.com] -- ANGLO PLATINUM has lowered its refined platinum output expectation for 2007 by between seven and eight percent to 2.65 million ounces from its previous forecast for 2.8 million - 2.9 million ounces as it implements safer working environments at its operations.

“As a result of reduced labour efficiency and the implementation of a new approach to employee safety, refined platinum production of between 2.6 and 2.65 million ounces is expected in 2007,” the world’s largest platinum producer said in a statement accompanying its interim results.

Anglo Platinum told the market in June it would shut its Rustenburg section for a week at a cost of up to 15,000 refined platinum ounces to address the poor safety record at the operation, where five people were killed in the first half of June, bringing to 12 the number of people killed at the section.
a major shift
The company revised the lost ounces figure for Rustenburg in its interim results to 38,000 oz of refined platinum.

"A similar safety intervention will be implemented at all of the company's operations and is expected to reduce 2007 refined platinum production by a further 65,000 ounces," it said.

The more than 200,000 oz reduction in refined platinum output this year caught the market by surprise and there was even more bad news. "This is worse than we had been anticipating. Even more concerning for us was the guidance provided for 2008 – we had forecast 3.4 million oz of platinum, but management guides to 2.8-2.95 million oz – we must assume from this that safety and labour issues will remain a feature," said JP Morgan's Steve Shepherd.

Miningmx reported on July 10 its safety review programme could be extended to other mines if the one-week stoppage at the Rustenburg section proved a success. "We'll see what the impact is at the Rustenburg section and then make a decision at Exco [executive committee]," Francis Petersen, head of strategy at Anglo Platinum said at the time. Meanwhile, there were other factors that knocked the group's operations in the first half.

"Increasing competition for labour in South Africa and a deterioration in safety performance at our Rustenburg mine reduced our operating efficiency during 2007 resulting in lower than expected growth in production from operations and higher operating costs," CEO Ralph Havenstein said.

Anglo Platinum is pulling its safety policies into line with those of Anglo American, which owns 75% of the company. New CEO Cynthia Carroll has brought a strong emphasis on safety with her from her previous position as head of Alcan's primary metals division.

"Anglo Platinum fully supports the Anglo American ambition to set the safety standard in the mining industry and has implemented a major shift in its approach to employee safety," Havenstein said.

Anglo Platinum’s first half refined platinum output declined 11% to 1.194 million ounces because of increased process pipeline stocks due to a rebuild of its slag retreatment facilities. These stocks will be refined for sale during the second half of 2007.

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Output from its mining operations climbed by 1.3% to 1.274 million ounces. The figure is lower than Anglo Platinum had anticipated as a shortage of skilled labour, contract labour instability, strike action at joint ventures, difficult wage talks, increased fatal events and lower process recoveries at Potgietersrust kicked in.

Cash operating costs leapt 19% to R7,200/refined oz because of an increased labour force to implement growth plans at its mining operations.

Anglo Platinum sold 1.212 million ounces in the period to end-June.

At Rustenburg, the mine produced two percent or 8,600 oz less platinum and an 18% decrease in primary development because of labour issues. There was high labour turnover resulting in increased employment of inexperienced workers, which meant a less efficient mine.

During the first six months of the year Anglo Platinum's board approved R6.2bn worth of projects to meet its expansion plans to meet average growth of five percent a year of refined platinum. It spent R4.7bn during the period.