JOHANNESBURG (miningweekly.com) – Johannesburg- and London-listed Aquarius Platinum has placed its Everest mine, in Mpumalanga, on care and maintenance, as ramp-up challenges and the low platinum-group metals (PGMs) price environment render the mine uneconomic.
The company, which now had three of its seven operations under care and maintenance, said on Thursday it would restart mining once the platinum industry entered a better price environment and improved industrial relations.
Last week, Aquarius suspended the operations of its 50:50 joint venture (JV) Marikana platinum mine, near Rustenburg, in the North West province, as the continuing low PGMs price basket weighed on the industry.
The group’s Blue Ridge mine, in Mpumalanga, ceased operations during 2011 as the Rand basket price failed to justify further capital expenditure (capex).
Aquarius commented in a statement that the “only defensible strategy” for a platinum producer was to cut all nonessential capex and place all noncontributing assets on care and maintenance in an environment of lower labour productivity and above-inflation cost.
Liberum Capital pointed out that the Everest mine recorded a third-quarter cash cost of R13 474/oz of 4PGM, resulting in a loss of R3 500 for every ounce produced at current spot prices.
Aquarius stated that no further suspensions were expected. The company now had two operating mines, namely its largest operation, Kroondal mine, near Rustenburg, and the Mimosa JV mine in Zimbabwe. It also owns the Platinum Mile tailings retreatment operation and the Chromite Tailings Retreatment plant, both based near the Kroondal mine.
It was expected that the remaining two mines and the two tailings operations would maximise short- and medium-term cash flows for Aquarius.
The miner was also currently acquiring platinum producer Northam’s Booysendal South assets.
However, Liberum Capital commented that it was unlikely that Aquarius would complete the acquisition under its current terms, owing to a $130-million payment due to Northam in the fourth quarter of 2012.
Liberum further noted that it could be beneficial if the parties sought a joint future development approach for their respective projects, adding that “it seems inconceivable how Northam will be able to finance their Booysendal North project in current market conditions”.
Last month, TSX- and JSE-listed Eastern Platinum suspended funding for its Mareesburg project, as well as the construction of the Kennedy's Vale concentrator plant project, citing uneconomical conditions.
JSE-listed Royal Bafokeng Platinum (RBPlat) on Thursday said it would defer R462-million in project capex in efforts to preserve cash flow. The group was currently reviewing its operating activities and capex and aimed to postpone expenditure in the short to medium term on certain noncritical items.
Solidarity on Thursday voiced its concern that the platinum industry would experience further mine closures or retrenchments as the negative market impacted a number of platinum mines in South Africa.
Solidarity has welcomed Mineral Resources Minister Susan Shabangu’s establishment of a task team to save jobs in the platinum industry, as government, business and organised labour attempt to join forces to aid the country’s beleaguered platinum industry.
However, the trade union cautioned that the process should be carried out speedily and with the necessary transparency.
Meanwhile, Solidarity called on Aquarius to implement a social plan to prevent some 1 500 employees losing their jobs following the closure of its Everest mine, said spokesperson Louis Pretorius.
Pretorius further stressed that the principal mining contractor at the Everest mine, Emgodini, should assist employees with, besides others, applying for other jobs at other mining groups.
Aquarius’ share price plunged 11.95% on Thursday afternoon, closing at R70 a share.