Amplats counts the cost of plant repairs


Amplats counts the cost of plant repairs

Published Date: 2020-03-20 | Source: Stephen Gunnion | Author: Stephen Gunnion

Amplats counts the cost of plant repairs

The platinum producer says it is reviewing its capex plans for the year due to the expense of fixing the converter plant at its Waterval smelter.

Anglo American Platinum (Amplats) says it will cost up to R800 million to repair converters at the Anglo Converter Plant (ACP) at its Waterval smelter in Rustenburg, most of which will be expensed this year. As a result, it is reviewing its capital spending plans for the year.

The platinum producer declared force majeure earlier this month due to an explosion that took the ACP phase A converter plant out of commission. As it switched over to its phase B unit, water was detected in the furnace so it had to shut that converter down too. It cut its full-year production guidance for platinum and palladium by more than a fifth as a result.

The group said replacement equipment and repairs at the Phase B unit would cost between R150 million and R200 million, which would be incurred this year. Estimated capital expenditure to rebuild Phase A would be R500 to R600 million, of which R100 million was expected to be incurred next year. The amounts excluded any potential insurance proceeds.

In the meantime, the group has agreed in principle revised processing agreements with Sibanye-Stillwater, which it has a toll agreement and a purchase of concentrate deal with. It also buys concentrate from Royal Bafokeng Platinum, the Modikwa joint venture, Siyanda Resources and other third parties. It said it had engaged with all parties and had agreed in principle temporarily revised terms which would allow concentrate to continue to be delivered to its smelters during the force majeure period.

It said the force majeure would stay in place for the time it took to repair ACP Phase B, which was expected to be approximately 80 days starting from 6 March.

Its shares fell 30% to R442.87 yesterday, outpacing a 25% decline in the value of the JSE's Platinum Mining Index.

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