A company declaring force majeure is notable. It’s a share-moving event and never for the upside.
For a company in the Anglo American stable it’s even more remarkable. But there is a certain poetic aspect to this story.
There has been in short order a failure of the two converter plants that are the entry point for all platinum group metal-bearing and base-metal rich matt material coming from Anglo American Platinum’s four smelters to feed the refineries.
The converter essentially cleans iron out of the matt in preparation for the base metals to be removed and then the staged extraction of the six metals making up Amplats’s output.
In the normal course of operations, this bottleneck is served by one converter, with the other standing by in case the first fails. In this instance, both plants are out of order, the first after an explosion in February and the second because of a mysterious ingress of water, forcing its shutdown for 80 days of repairs.
Chris Griffith, who announced his departure as CEO at the time of the company’s results in February, left on a high: record results, best safety performance and buoyant share price. But on the eve of his departure, the concentrators failed.
His replacement is the head of Anglo American’s processing division, Natascha Viljoen, an expert in the plants that extract metals from ores, particularly PGMs. She earned her stripes at Lonmin, then the world’s third-largest platinum miner, where the company was struggling with its smelters because of high levels of chrome in the concentrate feed.
She is credited with having led the team that resolved those problems successfully.
Her start in April with Amplats is dealing with another large processing problem that has rattled the PGM market. She is already involved with fixing the converters, but it becomes fully her problem in less than a month, a true test of her abilities.
Property firms may be forced to delist
Struggling property companies who see delisting from the JSE as a last resort to overcome their challenges, could be forced to do so as stock markets plummet globally.
The listed real estate sector started 2020 badly, as investors began to sell out of property counters, taking liquidity with them. Real estate tends to track the performance of the economy, as well as investor sentiment in it and last week GDP data from Stats SA confirmed that the country was in recession.
The SA economy shrank by 1.4% in the fourth quarter of 2019, after a contraction of 0.8% in the third quarter.
On top of a battling local economy, the international coronavirus outbreak has put more pressure on property stocks. The FTSE/JSE SA Listed Property Index, which includes the 20 largest and most liquid property stocks on the local bourse, was down 18.35% year to date, having lost 2.30% on Monday.
Some property stocks such as Texton Property Fund, Intu Properties and Tower Property Fund, which is battling to pay dividends, are prime candidates to delist. Some of these companies have struggled to raise equity locally and abroad.
With little money going around and bleak prospects ahead, it might be time to go private and in some cases to sell assets.
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