Sibanye-Stillwater To Benefit From Higher Commodity Prices After Anglo American Platinum Closes Plant -- Update
March 06 2020 - 12:44PM
Dow Jones News
--Anglo American Platinum cut its full-year guidance after an
explosion forced a plant closure
--The company slashed its full-year platinum guidance by about
20%
--Sibanye-Stillwater believes short-term commodity price
increases will benefit the company
By Alexandra Wexler and Adriano Marchese
JOHANNESBURG--Sibanye-Stillwater Ltd. said Friday that it will
benefit from a short-term commodity price increase caused by a
supply disruption in Anglo American Platinum Ltd.'s operation
following the closure of one of its processing plants in South
Africa.
Earlier in the day, Anglo Platinum, the world's biggest refiner
of platinum group of metals, declared force majeure and slashed its
full-year guidance by about 20% after closing the South Africa
plant, sending platinum futures higher and potentially pushing the
global market into a deficit this year.
The miner, a subsidiary of Anglo American PLC, said it has shut
down its Anglo Converter Plant at its Waterval smelter in the
platinum-mining town of Rustenburg after an explosion on Feb. 10 in
the phase A section of the plant caused damage. Water detected in
the furnace of the processing plant's alternate phase B section
posed the risk of another explosion and forced the closure of the
entire facility, the company said Friday.
South African mining company Sibanye-Stillwater has a toll
agreement with Anglo Platinum and its Rustenburg operation as well
as a purchase-of-concentrate agreement through its Kroondal and
Platinum Mile operations. Sibanye-Stillwater said it had received
written notification of the force majeure from Anglo American
Platinum.
It said that its own Marikana and U.S. PGM operations are not
affected and instead should benefit from the increased short-term
price increase due to the disruption.
Anglo Platinum slashed its 2020 guidance for refined platinum
production to 1.5 million-1.7 million ounces from a previous
estimate of 2 million-2.2 million ounces. Platinum group metals had
been seen as a bright spot for Anglo in recent months, allowing it
to outperform rivals. Guidance for palladium in 2020 was also cut
to 1.1 million-1.2 million ounces, down from 1.4 million-1.5
million ounces. Overall platinum group of metals production--which
includes platinum, palladium, rhodium and others--was cut to
between 3.3 million and 3.8 million ounces from 4.2 million-4.7
million ounces.
The changes in supply could push the market into a deficit this
year, according to the latest figures from the World Platinum
Investment Council, an industry group that recently revised its
estimated surplus for 2020 downward to just 119,000 ounces. Anglo
Platinum says the shutdown will delay approximately 900,000 ounces
of production from hitting the market.
Platinum was recently trading 4.2% higher at $901.80 a troy
ounce on the New York Mercantile Exchange. Palladium was 1.9%
higher at $2,515.80 a troy ounce on Friday morning in New York.
Meanwhile, shares of Anglo American tumbled 8% to 16.94 pounds
($22.04) a share on the London Stock Exchange and Anglo Platinum
shares on the Johannesburg Stock Exchange tumbled 14% to 956 South
African rand ($60.67).
Anglo Platinum said repairs to phase B of its processing plant
are expected to take around 80 days, while phase A repairs are
expected to be completed around the second quarter of 2021. No one
was injured in the explosion, but the closures have forced the
company to declare force majeure to clients, since production from
its own mines and third party material cannot be refined.
Sibanye-Stillwater said it has "significant spare PGM processing
capacity" at the Marikana operations and at the precious metal
refinery in Brakpan and that it will be assessing how best to use
this capacity.
Anglo Platinum Chief Executive Chris Griffith said on a call
with media that the plant is "an integral part of our processing
chain," and that it will take about two years to catch up on
processing the material that will be continue to be mined during
the shutdown.
--Joe Hoppe contributed to this article.
Write to Alexandra Wexler at alexandra.wexler@wsj.com, and
Adriano Marchese at adriano.marchese@wsj.com
(END) Dow Jones Newswires
March 06, 2020 12:29 ET (17:29 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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