Sibanye-Stillwater may divert PGMs to Marikana after shock closure of Amplats refineries

SIBANYE-Stillwater would discuss the possibility of refining concentrate it currently supplies to Anglo American Platinum (Amplats) at its Marikana facilities following disclosure today that Amplats had shut its processing facilities.

There may be less flexibility for Royal Bafokeng Platinum (RBPlat), however, which processes all of its concentrate through Amplats. Unlike Amplats which has guarantees provided to it by parent, Anglo American, RBPlat is a standalone company battling to reduce costs at its Bafokeng Rasimone Platinum Mine (BRPM).

RBPlat, which halved net debt to about R450m in its six months ended December 31, recently unveiled a dividend policy of 10% of free cash after expansions. It had not yet replied to call and text inquiries from Miningmx at the time of writing.

Amplats announced that following an explosion at one of its processing facilities on February 10 it had located water in a back-up facility, the presence of which ran the risk of a second explosion. As a result, Amplats shut both facilities which would see it refine 900,000 oz less platinum group metals (PGM) than forecast for 2020.

It expected to have its processing facilities returned to service over the next 12 to 15 months with the back-up facility operating after 80 days. But suppliers of ore to Amplats, were left searching for back-up plans as they were only informed about the closures with the rest of the market today.

This includes Sibanye-Stillwater which has a purchase of concentrate contract (PoC) with Amplats for material from its Kroondal mine, and a toll-treatment agreement for material mined at its Rustenburg facilities.

As PoC agreements see Amplats take ownership of Kroondal’s mined PGMs, it would be more difficult to negotiate a temporary alternative agreement, but the Rustenburg mined PGMs could be diverted to Sibanye-Stillwater’s Marikana facility which has a refinery.

“We have only just found out now so we are still working around it,” said James Wellsted, spokesman for Sibanye-Stillwater.

The impact of the Amplats interruption on Sibanye-Stillwater, however, was limited, he said. “Quarterly we produce about 240,000 4E from Amplats’ facilities and of that Kroondal is about 75,000 oz which is only about 13% of our South African production,” he said.

“We have got to discuss this with Amplats but we do have spare capacity at Marikana. The toll treatment contract is easier to negotiate but the PoC is more difficult as ownership of the concentrate is passed over as soon as it is supplied,” he said.

Chris Griffith, the departing CEO of Amplats, said today that his company would look to refine its concentrate elsewhere but there was no chance of it being at Impala Refining Services (IRS) which is owned by Impala Platinum (Implats).

“We have 350,000 oz of PGM inventory that will take us two years to work through,” said Johan Theron, spokesman for Implats. “If we did anything it would be at the expense of our own material and half of that is platinum which is worth about R10bn at spot,” he said.