Anglo American Platinum Cuts Guidance After Explosion Forces Plant Closure -- Update

--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%

--Platinum futures rose after the news

 
   By Alexandra Wexler

JOHANNESBURG--Anglo American Platinum Ltd., the world's biggest refiner of platinum group of metals, declared force majeure and slashed its full-year guidance by about 20% after shuttering a processing plant in South Africa, sending platinum futures higher and potentially pushing the global market into a deficit this year.

The miner, a subsidiary of global miner Anglo American PLC, said Friday it has shut down its Anglo Converter Plant at its Waterval smelter in the platinum-mining town of Rustenburg after an explosion in the phase A section of the plant on Feb. 10 caused damage. Water detected in the furnace of the processing plant's alternate phase B posed the risk of another explosion and forced the closure of the entire facility, the company said Friday.

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.

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

(END) Dow Jones Newswires

March 06, 2020 09:20 ET (14:20 GMT)

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