Amplats will be “challenged” to smelt PGMs if Eskom hikes loadshedding, says Viljoen

ANGLO American Platinum (Amplats) will be “challenged” to refine metal if loadshedding by South Africa’s government-owned utility, Eskom was increased from current levels, said the platinum group metal (PGM) firm’s CEO, Natascha Viljoen.

“We are going to be challenged to move all of our metal in refining for the rest of the year,” said Viljoen today in response to a question over the impact of Stage 6 loadshedding were it to be implemented by Eskom.

Andre de Ruyter, Eskom CEO, said the utility was “working hard” to avoid having to rationing power further amid an illegal strike by employees and plant breakdowns. South Africa is currently in Stage 4 rationing which Eskom said earlier this week would persist until June 29 (Wednesday).

Viljoen said Amplats found itself “often thinking in 12 month increments” in terms of getting its metal into refining: “You are limited on how quickly you can unwind stock that you build up,” she said.

Viljoen added that Amplats’ approach was to reduce power consumption at its smelters first rather than at mining where it implemented cuts last of all. “If the ore is on surface, we will process it in some way or form. So we draw back from processing,” she said.

Eskom hadn’t asked Amplats to reduce power consumption at the current level of rationing “because of the kind of load shedding,” said Viljoen. “The silver lining is that we are never entirely surprised. There is a good communication flow and opportunity to be very deliberate in that cutback,” she said.

Employee share scheme

Viljoen also said Amplats was consulting with unions regarding a new employee share plan. Whilst it can implement a new plan without signing an agreement with union, unions were nonetheless entitled to apply for a strike certificate if they objected.

“We have an employee share scheme that is currently in a consultation process,” said Viljoen. “It is not a negotiation process – which is important … In a negotiation we need to get to an agreed outcome whereas consultation is a matter of sharing and educating. But you can implement without agreeing a final position.”

On May 26, Amplats said it had agreed a five-year wage deal with unions that will increase the total labour cost to company 6.6% on average over the period.

Viljoen said today there was a clause in the agreement that allowed renegotiation after three years if either party felt it was insufficient or “too expensive”. That would depend on the rate of inflation, she said. Consumer price inflation came in at 6.5% in May – a five year high – compared to CPI of 5.9% in April, according to Statistics South Africa.

“So if inflation is really high, either party has the right to open it up (for discussion). But there are rules around it (regarding how much inflation needs to increase or drop). We have the right to open it up and say it’s too expensive,” said Viljoen.