Anglo American’s shares dropped 9.5 per cent today after the firm’s platinum arm was forced to shut down its platinum plant, declaring force majeure as it did so.
The mining giant said that it had done so due to a high risk of an explosion in its phase B unit, which had been commissioned to take over from its phase A unit which had already shut due to an explosion.
However, after water was detected in its furnace the company said it had “no other option” than to shut down the plant to avoid a “catastrophic event”.
Anglo American estimates that repair work for the phase B unit will take approximately 80 days to complete, but hopes that phase A will be up and running again by the second quarter.
The subsidiary cut its total platinum group metals guidance for 2020 from 4.2-4.7m ounces to 3.3-3.8m ounces.
The group said: “As a result of the temporary closure of the entire plant, Anglo American Platinum has had to declare force majeure to customers, suppliers of third-party purchase of concentrate and suppliers of tolling material, as we are unable to complete the processing of material during the converter repair”.
It will continue with production from its own mines, but said that this material would not be converted to refined production during the repair process.
The shutdown is a serious blow for new Anglo American Platinum (Amplats) boss Natascha Viljoen, who is due to take over from 30-year company veteran Chris Griffith in April.
Palladium has seen its price go through the roof so far this year, rising 41 per cent and raising hopes that Amplats could repeat last year’s performance, when it doubled its profit.