JOHANNESBURG (miningweekly.com) – World number-four platinum miner Aquarius Platinum CEO Stuart Murray has criticised the increasing number of safety stoppages in South Africa and said the country has become a “difficult place” to operate in.

The ASX-, LSE- and JSE-listed miner reported a 4% quarter-on-quarter drop in its attributable production to 105 629 oz of platinum-group metals (PGMs) in the three months to the end of December, which Murray partly blamed on the “widespread and sometimes unjustified” application of Section 54 stoppages.

“This issue is making the South African mining industry a difficult place in which to operate and while zero-harm is laudable, there must be practical implementation of the law. Not only have the incidences of these stoppages risen markedly, in many cases the time now taken by the regional department to resolve these stoppages has risen from two days to a week or sometimes more,” he said.

The Section 54 stoppages increased in frequency for all South Africa’s platinum miners, with both Anglo American Platinum and Lonmin indicating last week that they were discussing more appropriate safety mechanisms with the Department of Mineral Resources, as the current trend of safety stoppages adversely impacted on production.

Murray also slammed the regulatory environment in Zimbabwe, where it owns the Mimosa mine, which reported flat output.

“Some of the stakeholders in both countries in which we operate simply do not grasp the fact that there are only 100c in the rand and 100 pennies in the dollar. There is simply no more to be taken before operations are threatened.”

Murray said the challenges facing the region’s platinum industry should not be underestimated. “PGM margins are now low in both rand and dollar terms and oversupply, coupled with poor economic outlook is likely to ensure that this remains the case, at least in the short term.”

In South Africa, attributable production from the Kroondal mine fell by 27% year-on-year and 2% quarter-on-quarter to 43 398 oz in the December quarter. Marikana’s output declined by 12% year-on-year to 14 404 oz. This was, however, an 11% increase on the 12 996 oz produced in the September quarter.

Despite issues relating to the implementation of the new hangingwall support methodology at the Kroondal and Marikana mines being largely resolved during the quarter, production remained below capacity owing to the widespread application of Section 54 safety stoppages.

Kroondal’s revenue fell by 16% to R642-million quarter-on-quarter due to lower volumes and a reduction in the basket price, which resulted in a negative sales adjustment of R125-million.

Similarly, revenue at Marikana decreased by 4% to R221-million quarter-on-quarter despite increased volumes, owing to lower basket prices, which resulted in a negative sales adjustment of R40-million.

Production at the Everest project was negatively impacted by a protected two-week strike by Members of the Association of Mining and Construction Unions employed by contractor Murray & Roberts Cementation. Production fell by 19% quarter-on-quarter to 18 712 oz – its lowest level in 18 months and cash costs rose by 10% to R10 737/oz

Everest’s revenue declined by 34% to R140-million compared to the previous quarter.

Average PGMs dollar prices deteriorated in the quarter with platinum and palladium falling by 14% and 17% respectively, while rhodium fell 16%

Liberum Capital said in a note to clients that Aquarius’ December quarter production was 14% below its estimate, but conceded that a 4% fall in production could be considered a “decent result”.

“This torrid quarter from Aquarius Platinum, the traditional stalwart for disciplined and low-cost mining, lays bare that South Africa’s PGMs industry should be in cash preservation mode,” analyst Dominic O’Kane stated.

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