The processing plant Anglo American Platinum brought back into production in May is broken once again, disrupting the flow of metal into the refineries of the world’s second-largest platinum group metal (PMG) supplier.
Amplats, 80% owned by Anglo American, completed the R150m repair of one of its two broken Anglo Converter Plants (ACPs) ahead of time, bringing it into production on May 12, about two weeks earlier than expected.
The converter plants treat the matte material coming from the smelters, extracting iron and preparing it for the refining process in which base metals are stripped out, after which each of the six PGMs are extracted.
Without the converter plant, there is no material for the refineries to process and no metal for the company to sell.
Unexpected setback
Amplats said a water leak was detected on May 31 at the high-pressure cooling section of the converter that was brought back into production but the leak was unrelated to the repair work or fixed parts.
The leak is an unexpected setback for new Amplats CEO Natascha Viljoen, a processing expert, who took over leadership of the company from Chris Griffith.
Amplats gave no details on how long the new repairs would take.
“The first outage lasted for almost two months, with the reduced supply of refined platinum and palladium helping to support prices during the early stages of the Covid-19 lockdown. Amplats had expected to catch up refined PGM output in the second half, an aspiration that may now be in doubt,” BMO analyst Edward Sterck said in a note.
He estimates Amplats will lose 4,000oz-9,000oz of refined platinum and 2,500oz-5,000oz of palladium output each day the converter is out of operation.
“While a detailed technical investigation into the cause of this leak and potential repairs is under way, the company has taken the decision to temporarily close the ACP Phase B unit to ensure an ongoing safe operating environment, protect employees and protect the integrity of the plant,” Amplats said in a statement.
Amplats declared force majeure on supply contracts in March after its two converter plants broke in quick succession. Amplats used one of the converters, with the other on standby in case there was a problem with the first.
Many uncertainties
Force majeure is a common clause in a contract that frees companies from obligations in the event of a natural or unavoidable incident.
Amplats forecast in March that its total refined output for the year would fall by a fifth, or 900,000oz, a number the company left intact because of the many uncertainties around restarting its mines under Covid-19 lockdown conditions.
Amplats said it will update the market in the week starting June 8. “In the meantime, the repair of Phase A unit is progressing well and is unaffected by the current work at ACP Phase B unit.”
Amplats had lifted the force majeure notices to both its customers and suppliers of concentrate for smelting and refining.
These suppliers of concentrate, include Sibanye-Stillwater, the world’s largest PGM supplier, and Royal Bafokeng Platinum. There was no comment from Amplats on whether it will reintroduce the force majeure clause on these supplies.
“Force majeure notices to customers and suppliers of concentrate had been lifted. It would be premature to comment further until the technical investigation has been completed,” said spokesperson Jana Marais.
Update: June 3 2020
This article was updated to say Amplats has lifted its force majeure notices to customers and suppliers of concentrate for smelting and refining.
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