Anglo American Platinum recently reported a robust set of financial results, underpinned by high prices for its metals. At the same time, operations are well-positioned for a strong recovery after facing significant headwinds in 2020. (Logo quoted from Anglo American Platinum’s official website)
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 14% year-on-year to 3,808,900 ounces, mainly due to the impact of Covid-19 lockdowns in South Africa and Zimbabwe. To ensure a continued focus on safety in response to the impact of Covid-19, internal stoppages were implemented. Despite these additional protocols, the company had a strong recovery in H2 2020, with own mines production up 1% against H2 2019 (normalising for the sections at Amandelbult that came to their end of life of mine).
Total refined production, excluding tolling, declined by 42% to 2,713,100 ounces, as the temporary closure of the ACP impacted refined production. The repair of the ACP Phase A unit was successfully completed by 24 November, ahead of schedule and within budget.
As a result of the ACP process interruptions, there was a build-up of work-in-progress inventory of around 1 million PGM ounces. It is expected that this build-up in inventory will be released by the end of 2022.
In line with the 14% decrease in mining production, the unit cost of production per PGM ounce increased by 15% to R11,739 (2019: R10,189). Excluding the costs associated with unproductive labour amounting to R1.6 billion, or R607 per ounce, unit costs would have been R11,132, or 9% higher than 2019.
PGM prices were strong in 2020. In US dollar terms, the average achieved basket price increased by 51% year-on-year to $2,035 per PGM ounce (2019: $1,347 per ounce), helped particularly by a strong rhodium price. The rand weakened against the dollar during the year, leading to the rand basket price rising by 71% to R33,320 per PGM ounce (2019: R19,534 per ounce). Net sales revenue increased by 38% to R137.8 billion (2019: R99.6 billion), mainly due to an improvement in PGM prices and higher sales from trading activities mitigating the supply disruption to customers following the temporary closure of the ACP.
Outlook
PGM production guidance (metal-in-concentrate) is expected to return to pre-Covid-19 levels of between 4.2 and 4.6 million ounces in 2021, while refined production is expected to reach 4.6 – 5 million ounces. PGM sales volumes are forecast to be in line with refined production.
The supply and demand for PGMs are both forecast to rise in 2021 compared to 2020. This was always likely as both have already improved significantly since the first half of 2020, mainly owing to the world learning to live with Covid-19. The roll-out of effective vaccines now suggests further upside, though how soon they bring the promise of ‘normality’ will vary by country and sector and, in some cases, ‘normality’ will be different than it was before the pandemic. The company expects palladium and rhodium to remain in deficit this year. Platinum is forecast to be in a small surplus.
(IRuniverse)
