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04 Jun 2020 | 13:12 UTC — London
Highlights
Losses estimated at 10,000 oz PGMs/day
Amplats still investigating problem
Update expected next week: company
London — South Africa's Anglo American Platinum has temporarily shut its Anglo Converter Plant (ACP) Phase B unit for a second time, with the extent and impact of the latest incident remaining unclear, Nedbank analyst Arnold Van Graan said June 4.
The company said June 3 that a water leak was detected on May 31 in the high-pressure cooling section of the ACP Phase B unit, part of the smelter complex in South Africa.
"This latest action is separate from the repair work that was recently completed at the ACP Phase B unit and there is no damage to the prior repairs or to the furnace," the company said in a statement.
Amplats – one of the world's largest platinum and PGM producers -- said an update will be provided as soon as more information is available, which is expected to be early next week.
The repair process might take between a few days to a few weeks, an industry source told S&P Global Platts.
"We expect the current shutdown to have a negative impact on refined production and possibly sales," Van Graan said, with losses estimated at 10,000 oz PGMs a day down-time, NOAH Capital Markets mining analyst Rene Hochreiter told Platts.
"So far, we estimate 40,000 oz down. Odd that after many years of trouble-free campaigns there is suddenly a spate of leaks," Hochreiter said.
"The fact that newly appointed CEO Natascha Viljoen is a flat-out metallurgist will no doubt help to get the ACP back on its long term track of good performance."
In March, the company's ACP Phase A and Phase B unit showdowns forced Amplats to revise down by 20% its 2020 full year production guidance on PGM 5E (platinum, palladium, rhodium, iridium and ruthenium) and gold.
Van Graan said that Amplats has not yet been able to identify the root of the problem behind the latest technical issue.
"The bigger worry for us is that there have now been several technical issues at this facility in recent months," the analyst said.
"This raises the question of whether there could be bigger issues at this plant, which may cause further disruptions down the line."
As a result of the shutdown, Hochreiter said he expects platinum, palladium and rhodium to fall into deficit in 2020, with higher PGM prices in Q3 2020 and beyond.
This is echoed by Afriforesight's head of precious metals Jason Welz.
"The fact that it was a leak unrelated to the previous repairs suggests a similar repair process might be necessary – this would ensure platinum, palladium and rhodium markets were all in deficit this year, but 2021 (and perhaps even 2022) supply might have a slight boost as built up in-process stocks are released," Welz told Platts.
"Overall we could expect higher prices this year (and probably price increases in Q3 2020), but prices to pull back more sharply in 2021, but to maintain a premium over the "base case" view."
A protracted outage may encourage Sibanye-Stillwater, the world's largest primary producer of platinum and the second-largest primary producer of palladium, to bring online the idled Marikana converter plant temporarily to soften the impact, Welz added.
Van Graan said the uncertainty about the ACP unit and sales volumes being potentially affected "could start to weigh on the Amplats valuation and could see some of the stock's premium start to unwind, in our view."