Five day water outage reduces Amplats Q3 refined output 9%

October 24, 2023

ANGLO American Platinum (Amplats) posted a 9% decline in refined platinum group metals (PGMs) output to 909,700 ounces for the third quarter partly owing to a five day water supply interruption.

Despite this the Anglo American-controlled firm maintained production guidance for the year of 3.6 to four million oz. However, it was struggling to contain costs which would be at the upper end of its R16,800 to R17,800 per PGM oz estimate for the 12 months.

The PGM market continued to work against Amplats in the quarter. The realised average third quarter PGM price was 39% lower year-on-year at some $1,539/oz. Amplats CEO Craig Miller said earlier this month he expected a 15% to 20% price rebound.

Miller, previously CFO of Amplats since 2019, took over from Natascha Viljoen on October 1 who had been Amplats CEO for three-and-a-half years. Viljoen joined the world’s largest gold producer Newmont as the gold producer’s chief operating officer.

Metal-in-concentrate production of 1,03 million oz featured a 25% quarter-on-quarter improvement from Amandelbult. On a year-on-year basis, Amandelbult’s third quarter production was 4% lower.

The mine has struggled in recent times, partly owing to lower available ore reserves as a result of poor ground conditions at Dishaba Mine. “Improving ore reserve availability at Dishaba Lower remains a priority,” said Amplats today. Previously, Amplats has cut costs, including the closure of the mine’s Merensky concentrator. The group has rejected speculation Amandelbult would be sold.

Commenting on lower refined production in the third quarter, Amplats said an unplanned, multi-municipal water stoppage at Rustenburg resulted in the loss of five working days equal to 54,000 oz. Refined platinum production decreased by 6% to 428,500 oz and refined palladium production decreased by 10% to 285,500 oz, the company said.

Load curtailment by Eskom had a minimal impact on production.

PGM sales volumes (excluding trading) increased by 2% to 951,800 oz due to a draw down in refined stock, said Amplats.

However analysts said they expected Amplats to report another stock build as of year-end on December 31. “Based on the [nine months] performance, we expect M&C production to reach towards the upper end of the guidance but refined production is likely to be towards the lower end,” said Citi in a report. “This could lead to inventory buildup,” it said.

Said RMB Morgan Stanley: “In aggregate it appears that inventories would have built from the 137,000 oz surplus reported at the 30 June 2023 interims.

In July, Amplats reported basic earnings of R7.7bn, a 71% year-on-year decline amid a 29% decline in the PGM basket price to $1,885/oz. “2022/23 prices were not sustainable and had potential to destroy the market,” said Miller.

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