Anglo American Platinum (Amplats) on Thursday reported a 9% decline in quarterly output, mainly as a result of load-shedding and lower grades at its flagship Mogalakwena mine in Limpopo.
Total production of platinum group metals (PGMs) for the three months to end-June fell to 943,100 ounces from 1.031-million ounces a year earlier, though Amplats maintained its full-year production forecast, as well as the unit cost guidance for each ounce of platinum group metals (PGMs) produced.
Its shares gained more than 5% to R949.78 before easing to R970.89, an increase of 0.88% on the day.
“Production was impacted mainly by short-term operational challenges and infrastructure closures at Amandelbult as well as expected lower grades at Mogalakwena,” departing CEO Natascha Viljoen said in a statement.
“Despite mining through higher internal waste areas, Unki continues to deliver a stable tonnes output along with Mototolo.”
So-called load curtailment affected the group’s concentrators and smelters, resulting in increased work-in-progress inventory of 38,900 PGM ounces for the reporting period.
Eskom’s Load curtailment involves energy-intensive industries users such as mines to reduce their consumption. The procedure has four levels, requiring users to decrease usage by between 10% and 20%. When the country moves to level 6 load-shedding, mines are moved to load curtailment level 4, which is a 20% reduction.
PGM sales volumes dropped 8% year on year to 1,108,700 ounces as refined production slipped. Still, metal-in-concentrate PGM production for the full year remains between 3.6-million and 4-million ounces.
The unit cost per PGM ounce produced is forecast to be at the upper end of the group's previously stated range — R16,800 to R17,800 — thanks to the rand-dollar exchange rate, and despite load-curtailment and mining inflation.
Amplats’ quarterly update comes just days after it released trading update in which its profit is projected to slump as much as 75% in six months ended June.
The plunge in profitability highlights the cyclicality of the mining industry, which is prone to the vagaries of the commodity markets.
In 2021, PGM miners posted record profits, enabling them to reward their shareholders handsomely, as well as the government through taxes and mining royalties. But the pendulum has since swung, with PGM prices coming unstuck amid uncertain global growth outlook.
A report by RMB Morgan Stanley released earlier in July paints a gloomy picture of tax collection in the mining industry this year.
The report, which analysed data from 15 mining companies — representing the majority of taxpayers in the sector — concludes that the tax take from the industry is estimated to more than halve to R50bn in 2023 at current spot prices, compared with 2021 when the fiscus collected R110bn in taxes and royalties from mining firms.
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