SIBANYE-Stillwater said it had “largely offset” the impact of breakdowns in Anglo American Platinum’s (Amplats’) refining facilities after agreeing to process platinum group metals (PGMs) previously destined for Amplats at its Marikana operations.
What this means is that instead of supplying PGM concentrate to Amplats in terms of purchase of concentrate deal and a separate toll-treating arrangement, Sibanye-Stillwater will process that material itself.
Amplats declared a force majeure event on March 6 after it discovered the presence of water in the back-up unit of its refining facilities at its Rustenburg plant. In February, an explosion had knocked-out the primary processing facilities at Amplats’ Rustenburg plant.
As a result, Amplats said it had adjusted PGM production down by 900,000 ounces, an amount of metal that would be built up in inventories whilst it remedied the problems at its backup plant – which would take 80 days – and fixed the plant damaged by explosion – which would take more than a year.
Sibanye-Stillwater said, however, that it had precious metal spare refining capacity at Marikana, the operations formerly owned by Lonmin which it bought last year. It also owned base metals refining capacity at facilities in Brakpan, east of Johannesburg. The arrangement announced today is realisation of that refining potential.
The net outcome is that Sibanye-Stillwater will deliver to the market the best part of some 240,000 oz in 4E PGMs it would previously have processed through Amplats’ facilities. However, there is still no processing arrangement in place for Amplats’ own PGMs, or that material of its joint venture partners, or third party material it smelts by arrangement.
In terms of the agreement, Marikana will produce PGM ‘containing material’ produced from its Rustenburg and Platinum Mile mining operations and approximately half of the PGM containing material produced from the Kroondal mine for the period of the force majeure, the company said.
Prior to the force majeure, PGM bearing concentrate from Rustenburg was smelted and refined by Amplats under a toll processing agreement while Kroondal and Platinum Mile PGM concentrate was subject to a Purchase of Concentrate (PoC) agreement.
PGM concentrate from Sibanye-Stillwater’s Rustenburg operations will continue to be smelted by Amplats on the same terms as the existing toll arrangement for the smelter portion.
Platinum Mile concentrate will be sold to and processed by the Marikana processing facilities for the duration of the force majeure period under the same terms as the pre-existing PoC agreement with Anglo Platinum. All benefits of the PoC agreement will accrue to Marikana, said Sibanye-Stillwater.
For the Kroondal operations, 50% of the concentrate produced from the Kroondal PSA [pool and share agreement] attributable to both parties will now be sold to and processed by the Marikana processing facilities under the same terms as the pre-existing PoC agreement with Anglo Platinum. All benefits of the PoC agreement for the 50% concentrate treated by the Marikana processing facilities will accrue to Marikana.
The remaining 50% of the concentrate produced from the Kroondal PSA will continue to be sold to Anglo Platinum on materially the same terms and conditions as the pre-existing PoC agreement. Delays in payment terms have been agreed, said Sibanye-Stillwater
The additional material planned to be treated at the Marikana processing facilities will have no impact on forecast production from the Marikana operation which is unaffected by the force majeure event, it said.
Discussions are ongoing with Anglo Platinum regarding the timing of delivery of refined metals from toll material from the Rustenburg operations which was in process prior to the force majeure declaration, and due to be delivered in March, April and May. Further detail in this regard will be provided in due course.
“We welcome the finalisation of these arrangements with Anglo Platinum, which will largely offset the impact of the force majeure event on the Sibanye-Stillwater operations and result in a minimal impact on the production outlook for the South African PGM operations,” said Neal Froneman, CEO of Sibanye-Stillwater.
