Johannesburg, South Africa — MININGREVIEW.COM — 18 February, 2008 – The current power shortages affecting the South African mining industry could cost Impala Platinum Holdings Limited (Implats) – second biggest platinum producer in the world – more than 20 000 ounces in lost production by the end of its current financial year in June, but the majority of its expansion projects and ramp-ups should not be affected.
Presenting the Implats Group operational review during the company’s official presentation of its results for the six months to December 31, 2007, CEO David Brown referred to the power situation as one of the four key issues facing the Group today.He emphasised that the power crisis would be an issue in both the short and medium term.
“Production in the second half of the year has already been impacted by the loss of about 10 000 platinum ounces,” he said. “We are currently running at about 90% availability, but this is sustainable only in the short term. If we run at 90% power for the next six months, we would potentially lose another 10 000 platinum ounces which would mean a total of 20 000 platinum ounces lost in the 2008 financial year due to power issues,” he added.
Brown warned that supply below the 80% threshold for a prolonged period would mean that processing facilities would be impacted. “This would result in the build-up of surface stocks, which would ultimately grind our operations to a halt,” he predicted, “and below 50% all operations would be put on a care and maintenance basis.”
On the plus side, Brown said that, given the current status quo, “the majority of our expansion projects and ramp-ups should not be impacted by power shortages. We are investigating all aspects pertaining to power,” he continued, “and these include: further power savings such as optimising compressed usage; in-house power generation; and all aspects of safety which may be impacted by further power issues.”
Brown went on to say that the other three key issues facing the mining industry were:
- Safety, which remains the group’s number one priority
- The skills shortage, which remains a matter of grave concern for the group and the industry as a whole; and
- Conversions – the Marula conversion will be in place by March 2008, and the Impala and Leeuwkop conversions are currently awaiting approval.
Looking ahead, Brown suggested that prospects for the PGM market remain very robust, although this could be tempered in part by the slowdown in western economies.
“The increase in production to 2.3 million platinum ounces by 2010 essentially remains in place,” he confirmed, “although this may be impacted by power issues facing the country.”
In the shorter term, he predicted that output for 2008 would be just below 2 million ounces, as the impact of power shortages across Implats operations and those of the company’s third party suppliers, begin to bite. “The company, though, is in good shape,” Brown concluded, “and it remains highly cash generative with an excellent dividend yield.”