Amplats quarterly output declines 10%

Anglo American Platinum (Amplats), the second-largest supplier of platinum group metals (PGMs) after SibanyeStillwater, said on Thursday its total output dropped 10% year on year in the three months to end-December.

However, the guidance for 2023 remains intact, Amplats said in a statement. Metal-inconcentrate PGM production guidance is forecast to between 3.6-million and 4-million ounces. Refined production is projected to be 3.6-million to 4-million ounces. Unit cost guidance per PGM ounce produced is R16,800 to R17,800.

In a production update, Amplats said lower grades at its flagship mine, Mogalakwena, affected total PGM output as did the closure of mined-out infrastructure at Amandelbult, which reached the end of its life.

Refined PGMs output declined 37% to 877,200oz as a result of the delayed Polokwane smelter rebuild due to the delivery of substandard materials for furnace construction, lower mined production and the effect of Eskom load-shedding, said CEO Natascha Viljoen.

“However, this was partially mitigated by strong utilisation and throughput from our other smelters,” she said.

The Polokwane smelter rebuild was completed in December 2022 and the company has largely completed the ramp-up.

“The impact of the delay to the Polokwane smelter rebuild, as well as Eskom load-shedding, net of inventory release and strong performance from Waterval and Mortimer smelters during the year, resulted in a year-end build-up in work-inprogress inventory of 100,000 PGM ounces,” she said.

“We remain on track to achieve our 2023 guidance, with a strong focus on operational excellence and cost discipline in the coming year.”

The production bottlenecks come at a time when the basket of PGM prices has normalised after hitting historic highs in the aftermath of the Covid-19 pandemic. The risk premium that was attached to palladium in 2022 amid the Russian invasion of Ukraine war has since unwound.

Palladium surged to $3,400/oz in the early days of the Russian invasion amid worries over supply, as Russia is one of the biggest producers of the commodity. However, the precious metal has since retraced to levels of $1,675.50/oz.

The average PGM basket price was $2,293/oz during the review period, lower than the fourth quarter of 2021 due to lower rhodium, iridium and ruthenium prices.

PGMs are used mainly to clean the emissions of internal combustion engines and prices are thus sensitive to demand in the automotive sector.

PGM sales volumes (from production, excluding sales from trading) dropped 31% to 883,400oz during the period in line with lower refined production.

The company’s share price closed up 2.97% at R1,322.06.