[miningmx.com] — ANGLO American Platinum’s (Amplats’) battle to keep costs down carries on, with the company again raising its unit cost target for 2011.
In a third-quarter production report posted on Thursday, Amplats said higher consumables, labour as well as electricity costs contributed to an increase in operating costs to R13,093 per refined platinum ounce during the first nine months of the year – 12% more than the R11,647/oz during the same period in 2010.
“The unit cost target for 2011 has therefore been revised to R12,900 per equivalent refined platinum ounce,’ read the report.
CEO Neville Nicolau pledged in February the group would’ve kept costs “at around 2010 levels’. Amplats’ cash operating costs per equivalent refined platinum ounce was R11,730 for the whole of 2010, but 2011’s cost target has since then been revised in July to between R12,400/oz and R12,600/oz, followed by the latest upward revision.
“Expected higher production volumes from underground sources, remedial actions implemented to improve safety performance and improving labour productivity is expected to reduce unit costs in the fourth quarter…to around R12,250 per equivalent refined platinum ounce,” read the statement.
Amplats would also need to speed up production significantly if it wants to achieve its target of 2.6 million ounces for 2011. After achieving 647,000oz of refined production (667,000oz refined equivalent) during the third quarter, it is still some 750,000oz short of the full-year target. Total production for the year so far has been 1.83 million ounces.
In July, Nicolau said the worse than expected cost performance was “primarily due to the increases in the cost of electricity, diesel, steel and labour which materially exceeded the escalation in the consumer price index.’
In September, Amplats and unions agreed to wage increases of between 8% to 10% for this year, as well as hikes of between 8% and 9% in 2012.
The group said it was expecting the platinum market to remain in balance for the rest of the year.
