Amplats upgrades refined PGM output to 2.7m oz after early ramp up of ACP A

Natascha Viljoen, CEO Anglo American Platinum

ANGLO American Platinum (Amplats) today upgraded its refined platinum group metal (PGM) production for 2020 to between 2.6 million to 2.7 million ounces after completing the rebuild of a processing unit more than three months ahead of budget.

Sales were also upgraded: they would be 2.8 million oz because minor metal refined inventories had been drawn down, the group said in a statement today. Amplats is 80%-owned by the UK-listed diversified mining group, Anglo American.

Refined production has been a nightmare for Amplats this year after shutting both of its Anglo Converter Plants (ACP) A and B. ACP A exploded owing to the intrusion of coal dust whilst ACP B was shut after water ingress was detected, risking an explosion.

ACP A was forecast to resume production during the second quarter of 2021, but the fact it was in ramp-up was described by Amplats CEO, Natascha Viljoen, as “extraordinary”.

“We were able to procure and deliver long lead-time items to site six months ahead of schedule despite the impact of Covid-19 on supply chains, enabling us to bring forward the rebuild to the end of 2020, ahead of our initial expectations of Q2 2021.

“First converter matte is now ready to be dispatched, allowing us to re-establish the processing pipeline to finished metals,” said Viljoen. “I am also pleased that our marketing team has worked tirelessly with our customers to mitigate the impact of the interruption and manage our contractual obligations during this period.”

Amplats refines PGM concentrate supplied to it from third parties such as Royal Bafokeng Platinum and African Rainbow Minerals.

Whilst ACP A has been out of action since February, the operation of ACP B has been an up and down affair. It was operating again in May, but tentatively so whilst the company assessed its progress. Then, in November, Amplats said ACP B would be shut for another extended period.

It was in the wake of this event that it downgraded production to 2.5 million oz (now adjusted upwards). Amplats said at this point the impact to earnings before interest, tax, depreciation and amortisation for 2020 would be about R6bn.

Amplats said today that the release of work-in-progress inventory which had been built up this year would take up to two years to release. RMB Morgan Stanley estimated in a report in November that Amplats could record 2020 net debt of more than $7bn.

There was also risk associated with having one ACP operating. The group was “driving without a spare”, analysts said.

“Amplats’ entire output of PGMs passes through the ACP and only having one phase fully operational at a time is high risk,” said Bank of America (BoA Global Research). Shareholders could also expect a hit to the year-end payout as a result of the technical problems.

One ‘silver’ lining is that the outages have further supported metal prices already affected by fundamental supply deficits in rhodium and palladium especially.