Sibanye-Stillwater To Benefit From Higher Commodity Prices After Anglo American Platinum Closes Plant -- 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%

--Sibanye-Stillwater believes short-term commodity price increases will benefit the company

 
   By Alexandra Wexler and Adriano Marchese

JOHANNESBURG--Sibanye-Stillwater Ltd. said Friday that it will benefit from a short-term commodity price increase caused by a supply disruption in Anglo American Platinum Ltd.'s operation following the closure of one of its processing plants in South Africa.

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

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

South African mining company Sibanye-Stillwater has a toll agreement with Anglo Platinum and its Rustenburg operation as well as a purchase-of-concentrate agreement through its Kroondal and Platinum Mile operations. Sibanye-Stillwater said it had received written notification of the force majeure from Anglo American Platinum.

It said that its own Marikana and U.S. PGM operations are not affected and instead should benefit from the increased short-term price increase due to the disruption.

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.

Sibanye-Stillwater said it has "significant spare PGM processing capacity" at the Marikana operations and at the precious metal refinery in Brakpan and that it will be assessing how best to use this capacity.

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, and Adriano Marchese at adriano.marchese@wsj.com

(END) Dow Jones Newswires

March 06, 2020 12:29 ET (17:29 GMT)

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