IMPALA Platinum (Implats) processed the balance of its 350,000 ounces of platinum group metals (PGMs) inventory, brought forward plant maintenance, and escaped cancellations to sales contracts as a result of force majeure it announced to customers in the fourth quarter.
These were the main takeaway items of a market update today – two weeks before the group closes its 2020 financial year which, all in all, made relatively light of the strict COVID-19 lockdowns that wreaked significant pain elsewhere in the South African economy.
Nico Muller, CEO of Implats, emphasised in the update that health and business challenges lay ahead as the COVID-19 infections increased and peaked in South Africa.
But for the fourth quarter, the company used the lockdown to refine previously locked-up concentrate at its Rustenburg mine (Impala Lease) that would have otherwise remained on the company’s books well into its 2021 financial year.
“As a result, refined and sales volumes will exceed concentrate production in FY2020,” the company said. Refined production for the year was revised to between 2.77 to 2.8 million oz compared to previous guidance of 2.6 to 2.9 million oz. Actual refined production in Implats’ 2019 financial year totalled 3.01 million oz.
Concentrate production from Implats’ Rustenburg mine would be 1.06 to 1.12 million oz as per revised guidance compared to 975,000 to 1.05 million oz in previous guidance and actual 2019 financial year concentrate production from Rustenburg of 1.29 million oz.
Implats said it would reach 85% of productive capacity by the month-end having been operating at 50% previously in the wake of the relaxation of hard lockdown in April. About 5% of Implats’ employees were migrant workers who were waiting to return. The progress of getting migrant labour through closed border posts has been slow across the mining sector.
Production at Implats’ Zimbabwean operations had been largely unaffected but full production from Lac de Lilles, the firm’s Canadian mine acquired earlier this year would not be a full tilt until the first quarter of 2021 owing to spate of COVID-19 infections at the mine.
Implats said it had brought forward the annual acid plan maintenance which had been scheduled for July. “This is expected to result in greater-than-usual alignment of processing and mining capacity in Q1 2021FY but will have a small impact on the FY2020 year-end processing inventory,” it said.
Implats had issued force majeure notices to suppliers of concentrate to its Impala Refining Services facilities as well as to customers. It expected the resumption of concentrate in and refined metal out as the operations scaled up. No customers had decided to exercise cancellations owing to the force majeure implying that sales would remain relatively intact.
Muller said earlier this month in an interview with BusinessLive TV that the company would be cash neutral at worst owing to its ability to continue processing inventory and given the robustness of the rand-basket of PGMs, rhodium especially.
“Logistical constraints have eased and, despite the undeniable impact of the pandemic on global economic activity, demand for metal from our customers has remained robust, allowing us to capitalise on a reduction in excess inventory and a period of robust rand PGM pricing,” said Muller today.