South African miners preparing for three-week lockdown
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Various South African mining companies have pledged their support for President Cyril Ramaphosa’s Covid-19 directives and range of measures in respect of mitigating the impact of the pandemic on South Africa’s economy.
The pledges follow the President’s address to the nation on Monday evening, announcing a 21-day lockdown for the country from midnight on Thursday, March 26, until Thursday, April 16.
Almost all of South Africa’s mining operations are required to be placed on care and maintenance.
In response to the President’s announcement, the Minerals Council South Africa on March 24 described the directive and measures as “taking radical and preemtpive steps” to arrest, as far as possible, the further spread of Covid-19.
The council, on behalf of its members and industry, said it supported efforts to enforce social distancing, including confining most people to their homes to prevent social and nonessential business activities for the next three weeks.
“We recognise that the steps announced last night will potentially have a severe impact on the South African economy as a whole, including the mining industry,” the statement said.
Regarding the announcement, the council indicated that it was engaging with senior government leadership “over the detail of the lockdown” where the mining industry was concerned.
This includes the nature of essential services and what will be required in terms of care and maintenance for nonoperating facilities.
The Minerals Council also said that it was exploring what will be required to prevent the lockdown leading to permanent damage of the industry, considering that there are “marginal and lossmaking mines that would likely be unable to re-open should they be required to close fully, without remedial measures”.
“In addition to the measures announced by President Ramaphosa last night, there are other creative solutions being explored, including by organised business that could assist the survival and eventual recovery of the industry and the economy, the council said, adding that “the mining industry intends to be at the forefront of exploring these solutions”, as it seeks to ensure the long-term sustainability of our industry.
The National Union of Mineworkers (NUM), meanwhile, called on all mining companies "to respect and be guided by the high-level measures designed with the sole purpose of controlling and curbing the daily spread of the Covid-19".
In this regard, the union has indicated that the ten-point action plans agreed to with the Mineral Council of South Africa include employees education and health promotion for employees, contractors and suppliers; health worker readiness; ensuring access to consumables; proactive influenza vaccination; understanding the potential impact on employees who may be immune-compromised as well as case definition and management of suspected cases or contacts of cases.
The ten-point plan also encourages the isolation of employees should the need arise; travel advice; reporting and communication in the mining industry in the event of a case as well as monitoring.
“After meeting with the Mineral Council of South Africa, we are happy that the mining companies are coming on board. They are taking this pandemic various seriously, We did meet with the council and we agreed that we will meet from time to time as the need arises, to assess the situation going forward”, said NUM General Secretary David Sipunzi.
In terms of the nationwide lockdown, the NUM has pledged "in full support" to the government's efforts to curb the spread of Covid-19. As such, the NUM has cancelled all union-related gatherings of 100 or more people with immediate effect.
Integrated primary vanadium producer Bushveld Minerals has, following the announcement, said it is preparing to “safely and efficiently” put its Vametco operations and Vanchem facility on care and maintenance in such a manner as to be able to safely and timely ramp-up operations, and safeguard the long-term sustainability of the business at the end of the period.
Thus, the full-year guidance for both Vametco and Vanchem will be under review, as the company is “assessing the financial impact”.
To date, however, Bushveld’s supply chains have continued to operate as normal with deliveries of product continuing globally, while the company’s ability to source consumables and equipment “has not been affected to any material degree”.
Over the course of the past few weeks, Bushveld Minerals has established a task team to assist in developing a comprehensive and cross-functional response to the pandemic. In this regard, several awareness, prevention, risk mitigation and strategies have been developed and are currently being implemented.
With regards to the vanadium market outlook, the virus has had a negative effect on the global growth outlook. Having said that, Bushveld noted that China has shown signs of recovery since the government lifted the lockdown put in place to halt the spread of the virus.
Bushveld Minerals CEO Fortune Mojapelo commented that “South Africa’s decisive and bold intervention announced by the government this early in the epidemic’s cycle is an existential necessity,” albeit costly.
In a statement on March 24, gold miner Harmony Gold emphasised that the health and wellbeing of all its employees remain a “top priority”, adding that, to protect its assets and ensure people’s livelihoods to the extent possible and reasonable, the miner would ensure the orderly implementation and management of placing its mines on care and maintenance for the duration of the lockdown.
Harmony’s board, executive and management teams were at work on detailed arrangements to manage the effects of the lockdown on its business, and would disclose more details over the next two days.
The miner also cautioned that the Covid-19 directive would impact negatively on Harmony’s yearly production guidance of 1.4-million ounces, and therefore the company’s 2020 earnings.
“This is an unprecedented time in the history of the mining industry and our country,” CEO Peter Steenkamp said.
Gold miner AngloGold Ashanti also reported that it would temporarily suspend production from its South African operations for three weeks.
These operations will be placed into care and maintenance over this period, and plans will be developed to help safely regain production delayed by the shutdown, the miner said.
Operations affected by this include the Mponeng mine, Mine Waste Solutions and the miner’s surface rock dump processing operations.
These operations produced 419 000 oz for the year ended December 31, 2019.
This follows AngloGold Ashanti’s announcement last week that it would suspend production at its Cerro Vanguardia mine, in Argentina, until the end of March, in line with a suite of Covid-19 related work and travel restrictions imposed by the Argentinian Government.
The remainder of AngloGold Ashanti’s mines continue to operate normally, the miner said, adding that it has employed “a suite of measures to mitigate the risk of the spread of the Covid-19 virus”.
Midtier gold miner Pan African resources, meanwhile, indicated that it’s operations would also be put on care and maintenance.
The group has already implemented several measures to mitigate against the risk of the Covid-19 virus spreading at its operations, and is implementing contingency plans to ensure that all operations are safeguarded and secured during the lock down period.
In consideration of the lockdown’s impact on the group’s operations, the production guidance for 2020 is suspended until the company is “in a better position to quantify the full impact of the lockdown”.
In terms of immediate funding, the group’s liquidity position is considered robust with immediately available facilities of $20-million. In addition, Rand Merchant Bank has already agreed, subject to final credit approval, to defer the last three tranches of the existing gold loan’s redemption, constituting 5 000 oz, or $7.8-million, to the first quarter of the 2021 financial year.
Pan African also has access to an additional gold loan facility of about $11-million, should it be required.
If the lockdown is extended for a prolonged period, the company noted that it would look to reschedule its short-term senior debt obligations.
BASE AND PLATINUM-GROUP METALS
Anglo American Platinum (Amplats) and Kumba, in two separate statements on March 24 as well, noted that in relation to the lockdown, and to help curb the spread of Covid-19, the miner would review the detailed regulations relating to the action that are being published.
These will include the exemptions for certain business activities, and Amplats indicated that it would issue a further statement “in due course”.
“We recognise the critical role that our operations play in our host operating countries, including in terms of jobs and our local communities. We are therefore also working together with the government of South Africa to ensure the continuity of our business where appropriate to minimise any unintended consequences of the announced lockdown,” the miners said.
Platinum miner Impala Platinum (Implats) also on March 24 indicated that the company "is working systematically" to ensure an orderly transition to a period of care and maintenance at its mining, smelting and refining operations.
Implats, who plays a key role in the economy of South Africa, is a major employer, and its operations support multiple businesses and families in its host communities. As such, the group confirmed that it is engaging with the South African government to ensure the sustainability of the group and mitigate, where possible, the negative socio-economic outcomes of the shutdown.
The Implats board and executive management are currently engaged in "detailed analysis and planning" related to the impact of the shutdown on the group.
In addition, Royal Bafokeng Platinum (RBPlat) will be placing its operations under care and maintenance, with only essential services in place.
However, to give effect to the President’s announcementof a lockdown, RBPlat noted that it would be implementing several measures for the 21-day period.
In addition to placing its operations on care and maintenance, and a range of other measures, RBPlat will facilitate remote work for employees who are not required to work on site, to ensure business continuity as much as possible under the circumstances. Only essential services will be available at the operations to ensure the health and wellness of employees, to ensure continued screening for the Covid-19 virus continues and to ensure that employees continue to have access to healthcare.
RBPlat's protection services will be on alert to ensure that employees and assets remain protected, and health hygiene measures and body temperature screening will continue at all strategic points of the mines.
Social distancing will continue to be practised, even with only the core essential teams on site.
Integrated resource group Tharisa Mining will proceed with a systematic process of placing its assets on care and maintenance while ensuring both the health and well being of its employees, and that its assets "are protected".
Mining will be suspended post the night shift on Wednesday, March 25, and the plants will be placed on care and maintenance on Thursday, March 26. Tharisa on March 24 confirmed that it has put in detailed care and maintenance procedures for this period that will ensure start-up will be efficient post the lockdown.
Existing chrome ore shipments will continue as long as permissible, while platinum-group metal concentrates produced will be delivered prior to shut down. Ongoing projects will be suspended, Tharisa said.
South32, meanwhile, acknowledged that its business “is essential for the maintenance of power generation in South Africa”, which falls into the category of industries exempt from the lock down, per the President’s address.
As such, the company said that it would collaborate with government to “determine the impact” of this exemption on its South African energy, coal, and aluminium operations, given the role these play in the sustainability of State-owned power utility Eskom’s generation network.
South32 did, however, indicate that it was seeking clarification from government that the lockdown would extend to its South African manganese operations and have, as such, started planning for these operations, and the remaining furnace at its Metalloys alloy smelter, to be placed on care and maintenance.
Because of the President’s announcement, South32 is also withdrawing its guidance for 2020 for its South African operations.
CEO Graham Kerr said that the company’s response to Covid-19 is “built around three areas” – keeping its people safe and well, maintaining safe and reliable operations, and community support, “all of which are critical to the future of [South32]”.
MC Mining, meanwhile, has acknowledged the lockdown announcement and said it would affect the operations at the company’s Uitkomst Colliery, in KwaZulu-Natal. However, the extent to which operations would be impacted was yet to be determined and wuould be communicated in due course, the miner said in a separate statement.
Coal miner Buffalo Coal has confirmed that, in compliance with the directive issued, care and maintenance protocols are being developed and will be "fully implemented" at the company's operations in Dundee prior to the start of the lockdown.
In addition to the safeguarding and maintenance of the company’s critical infrastructure, the company said that these protocols will be designed to ensure continued compliance with all relevant environmental, safety, health and other relevant legislative requirements.
The national lockdown is expected to have a considerable negative impact on the company’s mining operations, and Buffalo Coal will engage with its financiers, major suppliers and other stakeholders in this regard.
London-listed Petra Diamonds is currently carrying out a “detailed review” of the lockdown directive to comply with the measures required, which will involve placing its mining operations in South Africa on care and maintenance for the duration of the lockdown.
On March 24, the company indicated that it would issue a further statement in due course once its review and planning has been completed.
Petra has, however, acknowledges it support of the South African government’s “decisive” measures to combat the Covid-19 threat.
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