Amplats slashes capex further

[miningmx] — ANGLO American Platinum (Amplats) has further reduced its planned
capital expenditure for 2012 and expects unit costs to outstrip most of its margins as
it continues to battle labour unrest at its South African operations.

The company on Thursday released operational figures for the third quarter of 2012 –
together with all the other subsidiaries of parent Anglo American – with the warning
that the fourth quarter’s data will bear the brunt of the various work stoppages
that have been carrying on since September 12.

The production of refined platinum increased by 4%, from what was previously
regarded as an abysmal second quarter of 2012, to 649,000 ounces. However, as a
result of the strike action that is costing the company 4,500 ounces in lost
production per day, Amplats has lowered its production guidance to between 2.2
million and 2.4 million ounces from a previously adjusted maximum of 2.5 million
ounces.

It further expects unit costs to be between R15,500 and R16,000 per equivalent
refined ounce. Platinum, excluding adjustments for other components of the PGM
basket price, was trading at around R13,800/oz on Thursday.

Also catching the eye is Amplats’s efforts to preserve its balance sheet, with capital
expenditure reigned in a further R800m to R6.5bn. This follows initial plans of
spending R9bn, which has been reduced on two occasions during the year.

The results of Anglo American’s copper division also didn’t make for pleasant reading
as the ramp-up of Los Bronces, in Chile, couldn’t make up for losses at the Collahuasi
joint venture. The group’s attributable figures for copper were down 2%, on a
quarterly basis at 157,300 tonnes, despite Los Bronces being in ramp-up mode. The
ramp-up itself is not yielding the desired results, with the mine being impacted by
higher waste stripping and lower ore grades.

Production at Collahuasi decreased by 40% due to a combination of lower recoveries,
an extended ball mill outage and reliability issues at the plant. “The joint shareholder
intervention initiated in July 2012 to address these issues is expected to start
delivering improvements from Q4 onwards,’ the company said.

Kumba Iron Ore put in a good performance with a 9% increase in quarterly output to
12.4 million tonnes, owing to faster than planned ramp up of Kolomela. The recent
strike action at Sishen will, however, weigh on the subsidiary’s fourth quarter figures
with the labour action accounting for 2.2 million tonnes.

As for the much-delayed Minas Rio iron ore project in Brazil, the company said it
anticipates first delivery in the second half of 2014. Anglo warned,however, capital
expenditure could increase further from the current estimate of $5.8bn.