JOHANNESBURG (miningweekly.com) – Owing to depressed market conditions with metal prices “tanking at an alarming pace”, compounded by ongoing work stoppages owing to five fatalities, platinum miner Royal Bafokeng Platinum (RBPlat) has posted dismal results, with a headline loss a share of 83c for the 2015 financial year, compared with headline earnings a share of 239c for 2014.

Spearheaded by CEO Steve Phiri, the group also reported a 19% year-on-year revenue decrease to R3.04-billion, owing to a lower realised average rand basket price and 5%-lower platinum group metal (PGM) production and sales compared with 2014.

Speaking at the group’s results presentation on Tuesday, Phiri pointed out that the safety stoppages resulted in production losses of 275 000 t, which equated to about 15 000 oz of platinum. “If we had mitigated these losses, it would have made a massive difference,” he noted, adding that this would have had a significant impact on any company, let alone a company of RBPlat’s size.

Further, the company noted that the lower revenue, together with a 6% increase in the cost of sales, resulted in a significant reduction in gross profit margin from 23% in 2014, to a gross loss margin of 1% in 2015.

Phiri added that RBPlat was well positioned to weather the storm, noting that its strategy would provide it with a “strong immune system” in the year ahead, despite the difficult conditions that were expected to continue.

The group would now focus on cash preservation, with R917.6-million cash on hand at year-end.

STYLDRIFT OPERATIONS
While RBPlat achieved successful commissioning of the Styldrift 1 main shaft, the material reduction in PGM prices during the first half of the year, which were expected to remain depressed, resulted in the suspension of all major contracts at the project. This delayed ramp-up by 12 months.

Steady-state production of 230 000 t/m would now only be achieved in the first quarter of 2020.

During the presentation, operations head Neil Carr highlighted that significant work had been carried out at Styldrift until June last year, with the company spending R5.48-billion on the project.

During the year, the company completed 1.6 km of development and delivered 650 000 t of on-reef development ore to the concentrator.

Speaking to Mining Weekly Online, RBPlat CFO Martin Prinsloo noted that the company’s 250 000 t/m Bafokeng Rasimone platinum mine concentrator upgrade, which was deferred, as RBPlat did not need the additional capacity last year, was now scheduled for completion during the second quarter of this year.

“We are quite far advanced with this project,” he added.

EMMISSIONS ISSUE
Despite the recent Volkswagen diesel emissions scandal, Prinsloo noted that it did not appear to be damaging diesel’s stake in light-duty power trains, which would in the year ahead, perhaps contribute to greater autocatalyst demand.

This was up 4% to 3.42-million ounces during the year, owing to sustained diesel car sales and tighter European Union (EU) Euro 6 emissions limits.

EU legislation would also allow for higher mononitrogen-oxide emissions than Euro 6 legislation for a number of years, giving vehicle manufacturers time to fully implement “clean diesel”, which would further support autocatalyst loadings. “As more emerging markets adopt the legislation, it will increase demand,” he said.

However, Prinsloo pointed out that, with South Africa being the producer of 75% of the world’s platinum, it should lead by example but was only meeting Euro 2 requirements. “We need to clean up our act,” he said.

Phiri added that if the country was concerned about economic growth, job creation and preservation, as well as the demand for platinum, it would speed up the process of meeting Euro 6 limits.