OVERVIEW
- Safety performance did not meet expectations and tragically we had one work-related fatality at Amandelbult and one at the Modikwa joint-operation during Q3 2020.
- Covid-19 continued to impact the business, however own-managed operations reached 94% of normal capacity by the end of the quarter.
- Own managed mines PGM production increased by 1% to 652,000 ounces despite the continued impact of Covid-19. Mogalakwena, Unki and Mototolo delivered strong performances.
- Joint operations PGM production (mined and purchase of concentrate) decreased by 23% to 190,600 ounces largely due to the impact of Covid-19 and the safety stoppage at Modikwa.
- Refined PGM production - owned decreased by 14% to 1,020,700 ounces. The lower output was principally due to interruptions at the Anglo Converter Plant (ACP), offset marginally by increased throughput.
- PGM sales volumes from production decreased 16% to 884,900 ounces due to lower refined production, and the rebuild of refined inventory.
Natascha Viljoen, CEO of Anglo American Platinum, said:
“The third quarter has been challenging with two work-related fatalities at Amandelbult and the Modikwa joint-operation. It is extremely disappointing that we have failed to ensure that every employee goes home safely to their families every day. We extend our deepest condolences to the families and friends of Mr Dennis Hlengani Mdaka and Mr Lindile Manzingi. Our focus remains on safe and responsible production and the adherence to Covid-19 measures, including extensive screening and testing protocols, at our operations.
“From a production perspective, we have managed to reach 94% of normal capacity by the end of the quarter from our own-managed mines, with Mogalakwena, Unki and Mototolo delivering strong performances. Refined production continues to be interrupted by water leaks at the Anglo Converter Plant’s Phase B unit. We have put increased monitoring in place at the Phase B unit to ensure an ongoing safe operating environment for our employees and will continue to take all appropriate measures to keep people safe while we wait for the main Phase A unit to restart. We have made significant progress with the Phase A unit and remain on track to commission it before the end of the year.”
REVIEW OF THE QUARTER
SAFETY & HEALTH
Anglo American Platinum remains committed to the elimination of fatalities, however, regrettably had two loss of life incidents during Q3 2020. On 13 September Mr Dennis Hlengani Mdaka passed away after a ventilation related incident at the Modikwa joint operation. On 16 September Mr Lindile Manzingi from Amandelbult succumbed to his injuries after a fall of ground incident at Dishaba Mine on 2 September. We again send our sincere condolences to their family, friends and colleagues.
The Total Recordable Case Frequency Rate (“TRCFR”) per million hours at managed operations for the quarter worsened in the quarter at 2.85 compared to 2.60 in the prior period.
Learnings have been incorporated into our operational practice including intensifying critical control compliance and assurance, particularly around fatal risk-related events. We continue our deliberate focus on operational routines compliance, as well as strict verification through scheduled, frequent and increased leadership presence at operations. Finally, we have an increased focus on planning to manage behavioural aspects proactively and understand employee state of mind, particularly during the challenges faced during the Covid-19 pandemic.
Covid-19 remains a significant challenge, however, Anglo American Platinum has fully embedded protocols to ensure risks to the health of our employees are managed, as well as keeping vulnerable employees away from potential harm. In addition to our world-class workplace Covid-19 protocols, we continue our extensive and rigorous screening and testing process at our operations to help keep our employees, their families and our local communities safe and healthy. We believe that the combination of screening and testing helps us to ensure that positive cases are detected earlier in the life cycle of the virus, allowing us to isolate and treat people in the earlier stages of the disease and prevent the spread of infection.
PGM PRODUCTION
Total PGM production of 1,112,900 ounces decreased 2% against prior year largely due to lower production predominantly from the joint operations of Modikwa and Kroondal, as well as lower production from Amandelbult. This was largely offset by strong production performance from Unki, Mogalakwena and Mototolo who increased production 12%, 9% and 6% respectively. Platinum production was down 2% to 516,400 ounces and palladium production was flat at 352,200 ounces.
The impact of COVID-19 on the business continued in Q3 2020 and PGM ounces lost for the quarter amounted to 119,000 ounces, bringing the year to date total to 712,000 ounces. The most notable impact in Q3 was at our joint operations, where 55,000 ounces (mined and purchase of concentrate) were lost. A further 52,000 ounces were lost from our third party metal providers and to a lesser extent at Amandelbult where we lost 5,000 PGM ounces. Mototolo lost 6,800 PGM ounces due to COVID-19 for the quarter but exceeded the prior quarter output.
Due to the overall strong M&C production performance in Q3 2020, we have increased our full year M&C production guidance to between 3.6 – 3.8 million PGM ounces (previously 3.1 – 3.6 million PGM ounces).
PGM production from own managed mines
Total PGM production from own managed mines increased 1% to 652,000 ounces (platinum production decreased by 1% to 295,100 ounces and palladium production increased 6% to 238,600 ounces). The strong performances at Mogalakwena, Unki and Mototolo was partly offset by lower volume from Amandelbult. The Company reached 94% of its normal operating levels at its own mined operations at the end of the quarter.
Mogalakwena PGM production increased 9% to 315,000 ounces (platinum production increased by 7% to 132,000 ounces and palladium production increased by 12%, to 146,000). The PGM production increase is due to higher throughput and improvements in concentrator recovery, but partly offset by a decrease in the 4E built-up head grade. The mine continued to operate at normal production capacity during the quarter.
Amandelbult PGM production decreased 12% to 204,800 ounces (platinum production decreased by 13% to 102,800 ounces and palladium production decreased by 11%, to 48,300 ounces). The lower production against Q2 2019 was primarily due to infrastructure closures at the end of 2019 at Tumela Upper (9,800 PGM ounces), surface material/opencast production coming to end of life (21,200 PGM ounces) and COVID-19 restrictions (5,000 PGM ounces). This was partly offset by increased production from Dishaba Upper (7,200 PGM ounces). Amandelbult operated at 90% of normal operating levels at the end of the quarter.
Mototolo PGM production increased by 6% to 72,200 ounces (platinum production increased by 6% to 33,300 ounces and palladium increased by 7% to 20,700 ounces). This performance was despite suffering 6,800 PGM ounce losses as a result of COVID-19 during the quarter, as the prior period was impacted by geological features which resulted in a grade decline.
Unki PGM production increased 12% to 60,000 ounces (platinum production increased by 14% to 27,000 ounces and palladium production increased by 10% to 23,600 ounces).
PGM production from joint ventures (50% own mined production and 50% purchase of concentrate)
Joint operations PGM production in total decreased by 23% to 190,600 ounces (platinum production decreased by 22% to 85,400 ounces and palladium production decreased by 24% to 56,400 ounces).
Modikwa PGM production decreased by 27% to 61,400 ounces (platinum production decreased by 25% to 24,000 ounces and palladium decreased by 27% to 23,200 ounces). This was largely due to Covid-19 restrictions, as well as due to the tragic loss of life incident and associated safety stoppages.
Kroondal PGM production decreased by 21% to 129,200 ounces (platinum and palladium production decreased by 21% to 61,400 ounces and 33,200 ounces respectively), largely due to Covid-19 restrictions.
Purchases of PGM concentrate from third parties
Purchase of PGM concentrate (POC) from third parties, increased 8% to 270,200 ounces (platinum POC increased by 13% to 136,000 ounces and palladium POC increased by 10% to 57,200 ounces). Increases in volumes were from Bafokeng Rasimone Platinum Mine and Platinum Mile while lower production was received from other providers.
Refined PGM production
Refined PGM production owned, decreased by 14% to 1,020,700 ounces (refined platinum production decreased by 13% to 503,800 ounces and refined palladium production decreased by 2% to 354,100 ounces). The decrease in the quarter was largely driven by Anglo Converter Plant (ACP) Phase B unit interruptions.
As previously highlighted, the ACP Phase B unit, which was recommissioned following the incident at the ACP Phase A unit, has been operating past its useful life and therefore challenged with reliability issues. Increased monitoring has been put in place at the ACP Phase B unit to allow for proactive risk control, ensuring an ongoing safe operating environment for our employees and to maintain the integrity of our assets. Due these proactive measures, water leak repairs, essential maintenance, testing and monitoring was conducted at the ACP Phase B, production was disrupted for 20 days during the quarter.
Refined production in the final quarter is highly dependent on the ongoing stability of Phase B, until a controlled switch-over to Phase A can be completed. As a result, we remain cautious on refined production in Q4 2020 and have revised full-year refined PGM production guidance to the lower end of our previous guidance to between 3.1 – 3.3 million PGM ounces.
The ACP stoppages have resulted in a slight increase in work-in-progress (WIP) inventory between Q2 2020 and Q3 2020. The build in WIP inventory is not lost production - only the timing of the release of WIP inventory to refined inventory is impacted.
If the ACP Phase B unit creates a material risk to employees or assets by continuing to operate, the Company will proactively conduct a safe shut-down, taking Phase B offline until the recommissioning of Phase A. The rebuild of ACP Phase A remains on schedule with completion estimated towards the end of Q4 2020.
The Company is focused on embedding strong asset reliability, which is of key strategic importance to enable Anglo American Platinum to position itself for the next stage of safe and sustainable value creation.
PGM sales volumes
PGM sales volume from production decreased by 16% to 884,900 ounces, in line with lower refined production (platinum and palladium sales volume both decreased by 17% to 448,500 ounces and 261,700 ounces respectively), as well as the rebuild of some refined inventory.
PGM sales volume from trading increased 210% to 341,000 (platinum trading volumes increased by 499% to 105,000 ounces and palladium trading volumes increased by 170% to 214,600 ounces).
PGM sales volumes for the year will remain highly dependent on the level of refined production in Q4 2020.
Unaudited financial position and committed facilities
At the end of the interim reporting period to 30 June 2020, the Company was in a net cash position of R11.3 billion, including the customer prepayment. As at 30 September, the Company remains in a net cash position of R20.6 billion. Anglo American Platinum also has R20.2 billion of committed facilities available.
2020 full-year guidance
We revise our full-year production and refined production guidance in line with performance year-to-date, and expectations in the final quarter as follows:
View full PDF of this press release (224 KB, opens in a new window)
View Q3 2020 production tables (449 KB, opens in a new window)