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Miners seek clarity on Covid-19 lockdown
Miners seek clarity on Covid-19 lockdown
Published Date: 2020-03-25 | Source: Stephen Gunnion | Author: Stephen Gunnion
Most mines are being placed on care and maintenance but some remain critical to the economy, including those supplying coal to Eskom.
Mining companies operating in the country are seeking more clarity on which of their mines can keep operating once the national lockdown aimed at halting the spread of Covid-19 takes effect at midnight tomorrow. Under the lockdown, announced by President Cyril Ramaphosa on Monday, mines should be placed under care and maintenance.
AngloGold Ashanti said it would temporarily suspend production at its SA operations and would develop plans to help safely regain production delayed by the shutdown, where possible. Its SA operations include the Mponeng Mine, Mine Waste Solutions and surface rock-dump processing operations. It recently sold them to Harmony Gold Mining, with the transaction expected to close at the end of June. Last week, it suspended production at its Cerro Vanguardia mine in Argentina until the end of March, in line with government restrictions. It said the rest of its mines continued to operate normally, employing a number of measures to mitigate the spread of the virus.
Harmony said all its operations were required to be placed on care and maintenance and it was working on detailed arrangements to manage the effects of the lockdown. This would negatively affect its annual production guidance of 1.4 million ounces and also its financial performance this year.
The Anglo American group of companies, including Anglo, Anglo American Platinum and Kumba Iron Ore, said it was reviewing the new regulations, including exemptions for certain business activities. Anglo said it was working with the government to ensure the continuity of its business where appropriate in order to minimise any unintended consequences of the lockdown.
Diversified miner South32 said it was seeking clarification from the government on whether they lockdown would extend to its South Africa Manganese operation and had started planning for its manganese ore business and the remaining furnace at its Metalloys alloy smelter to be placed on care and maintenance. It was also working with the government to determine the impact of an exemption on its SA Energy Coal and SA Aluminium operations as they played an important role in the sustainability of Eskom's generation network.
As a result of the pending lockdown, the group said it was withdrawing its full-year production guidance for its SA operations and would update the market when further information became available.
Gold Fields said its South Deep mine in SA would be placed on care and maintenance from Friday but it was seeking permission to continue pumping and for essential plant maintenance at the mine. The majority of employees would be sent home and would continue to receive their base pay for the 21-day lockdown period, it said. Meanwhile, its Cerro Corona mine in Peru was still continuing operations as the workforce stayed in a self-contained camp at the mine. In Ghana, its Tarkwa and Damang mines also continued operating, as were its operations in Western Australia. The company said it was in a strong financial position with significantly reduced debt at the end of December.
Gold producer Pan African Resources said it was implementing contingency plans to ensure that all operations were safeguarded and secured during the lockdown. It was also engaging with all stakeholders, including government, to obtain further detail on permitted activities over the period. It said its liquidity position remained robust, with immediately available facilities of $20 million. In the event that the lockdown was extended for a prolonged period, it said it would look to reschedule its short-term senior debt obligations. Its banking consortium had also confirmed its support in case it required further liquidity.
Impala Platinum said it was also preparing to put its mining, smelting and refining operations into care and maintenance and was analysing the impact the shutdown would have on the group. It was also engaging with the government to ensure the sustainability of its operations and mitigate where possible, the negative socio-economic outcomes of the shutdown.
MC Mining said while the lockdown would affect operations at its Uitkomst Colliery in KwaZulu-Natal, the extent to which it would be impacted still had to be determined.
AngloGold rose 14% to R316.48 yesterday while Harmony Gold gained 7.7% to R40.35 and Gold Fields added 14% to R91.19. Anglo American climbed 16% to R254.20, Amplats gained 10% to R612.06 and Kumba added 9% to R274.72. South32 closed 13% higher at R19.60 while Pan African Resources ended trade 3% up at R2.39 and MC Mining shed 30% to R1.35.
South African mining companies and those in the petroleum sector are meeting the country's mines minister, Gwede Mantashe to discuss how the #21daysLockdown that starts at midnight on March 26, will affect them, says SA's Minister in the Presidency, Jackson Mthembu.-- Fifi Peters (@FifiPeters) March 24, 2020