By Business Reporter
PLATINUM producer Anglo America’s production slumped by 25% in the first half of 2020 due to lockdowns imposed in Zimbabwe and South Africa to contain the coronavirus scourge.
The two countries have imposed national lockdowns since March this year due to the advent of the coronavirus pandemic, otherwise referred to as COVID-19.
The pandemic, which has claimed more than 600 000 lives globally, has affected more than 2 500 in Zimbabwe with 34 fatalities.
South Africa has more than 445 000 affected by the pandemic with more than 6 700 fatalities.
President Emmerson Mnangagwa imposed a national lockdown on March 30 this year before easing restrictions.
However, the upsurge in coronavirus infections has resulted in the Zimbabwean government tightening restrictions, which include a curfew between 6pm and 6am.
“Operationally, total PGM production (expressed as platinum, palladium, rhodium, gold, iridium and ruthenium metal in concentrate, including joint ventures and third-party purchases) declined by 25% year-on-year in the first half to 1 619 900 ounces, mainly due to the impact of Covid-19 lockdowns in South Africa and Zimbabwe,” the platinum miner revealed in its interim report for the six months ended June 30 2020.
It also revealed that total refined production, including tolling, declined by 46% to 1 246 900 ounces, as the temporary closure of the ACP and load-shedding in the first quarter impacted production.
“Work is well under way to repair Phase A of the ACP, which is expected to be completed by the year-end. A cautious approach has been taken with the ongoing operation of the Phase B unit during this period, with increased monitoring likely to result in intermittent stoppages to inspect the plant until the repairs to Phase A are completed,” the mining outfit said.
“As a result of the ACP process interruptions, there was a build-up of work-in-progress inventory of around 500 000 PGM ounces. It is expected that approximately 45% of this build-up in inventory will be released in the second half of 2020.”
In line with the 25% decrease in mining production, the unit cost of production per PGM ounce increased by 26% to R12 555 (H1 2019: R9 951), the platinum miner said.
Anglo American said at the end of June, production levels at its managed operations were at around 80% of normal capacity in aggregate, with expectations that this would increase to over 95% by the end of the year as it benefits from a high proportion of open-pit and mechanised production.
“While the early stages of recovery are underway in many geographic regions, there remains a great deal of uncertainty, with limited visibility beyond a few months. Mine supply is expected to be sharply lower this year due to the impact of COVID-19, while global recycling volumes are expected to be less affected. PGM demand will be impacted by the decline in global car and commercial vehicle sales and production, weaker sales of platinum jewellery, and softer industrial demand,” Anglo American said. ”Despite the impact on demand, we expect platinum, palladium and rhodium to remain in deficit this year. Longer-term, the company remains committed to expanding the role PGMs can play in enabling a lower carbon economy and we continue to lead the industry’s demand creation efforts across the industrial, investment and jewellery demand segments.”
Anglo American recorded net cash of R11,3 billion (H1 2019: R6 billion) and declared a dividend for H1 2020 of R2,8 billion, or R10,23 per share, based on a 40% pay-out ratio of headline earnings.
It recorded earnings before interest, tax, depreciation and amortisation of R13,1 billion (H1 2019: R12,4 billion)