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Force majeure for Sibanye, Implats

World number one and three among platinum group metal producers have issued force majeure notices to their customers, contractors and suppliers as SA enters its 21-day lockdown to curtail the spread of the Covid-19 virus.

World number one and three of platinum group metal (PGM) producers have told customers, contractors and suppliers that they would halt delivery as SA enters its 21-day lockdown to curtail the spread of the Covid19 virus.

Sibanye-Stillwater, with mines and plants in SA, the US and Zimbabwe, along with Impala Platinum (Implats), which has similar set-ups in SA and Zimbabwe, have both triggered force majeure clauses in their contracts.

For 2020 Sibanye has forecast production from SA of 1.7million to 1.85-million ounces of four PGMs: platinum, palladium, rhodium and gold. Implats said it was targeting up to 3.1-million ounces of those four metals plus iridium and ruthenium, from all its mines in SA, Zimbabwe and Canada.

They join Anglo American Platinum (Amplats), the world’s number two PGM producer, which declared force majeure on March 6. It did so well ahead of the national lockdown, because of processing difficulties that will only be resolved towards the end of May.

A force majeure is a legal defence that allows companies to avoid liability for failing to meet contractual obligations due to an unexpected event

SA is the world’s largest supplier of platinum, accounting for three-quarters of global output. It is a narrow second behind Russia in palladium supply and the top provider of rhodium.

These metals are used to make antipollution systems in petrol and diesel engine exhausts. Auto manufacturing has ground to a halt in Europe and the US, two centres of demand, while China is slowly returning to making vehicles.

Sibanye-Stillwater has stopped all its mines in its PGM and gold divisions in SA and halted processing, smelting and refining of the metals to comply with an instruction from the government last week that brought the economy to a halt for three weeks from March 27.

Sibanye runs deep-level, labour-intensive mines and it opted for the safest possible solution of closing these operations instead of applying for any exemptions from the department of mineral resources & energy, said spokesperson James Wellsted.

“It’s pretty obvious that if you don’t have your mines running you can’t supply metals, so it’s no surprise really that we’ve declared force majeure on our PGMs,” he said.

The Stillwater mine in the US was deemed by the government to be an essential service because the palladium and platinum coming from the operation is used to make medical equipment, stents and pacemaker devices, for example.

Stillwater had inventory of PGM-bearing autocatalysts that it will continue to recycle, Wellsted said.

Implats is keeping its precious metal refinery in Springs ticking over with a skeleton staff, while keeping its furnaces in Rustenburg hot with limited material after stopping its underground mines, said spokesperson Johan Theron.

About 80% of Implats’ sales are into contracts and these were supplied in March, ahead of the lockdown, he said.

Last Friday, the first day of the lockdown, Implats declared force majeure, which freed itself from obligatory supplies of metal and opened an avenue for talks about metal supplies.

Implats owns 80% of Zimplats, which is the biggest miner in Zimbabwe. Zimplats has applied to keep its mines fully operational as well as its concentrators and furnace, which produces a matte product normally refined in Springs.

Implats’ recently acquired Canadian operations are continuing unabated.

Zimplats operates outside any large centre and it is easier to ensure the workforce is screened and free of Covid-19, Theron said. The matte coming from Zimplats would be stocked in Zimbabwe until it could be moved across the border to SA.

At Mimosa, a mine shared with Sibanye and which is close to Bulawayo in south Zimbabwe, an application has been made for limited mining, restricting movement from the city and populous areas to the mine.

The Mimosa concentrator built up ore stockpiles during a mill breakdown in the first quarter of 2020 and this would be used to fill the plant, generating a concentrate that would be stored on site until it could be sent to the Rustenburg smelter, Theron said.

Implats is acutely aware of timing the restart of its smelter and refineries, using unprocessed material to return them to full production rather than putting that material through the plant immediately.

“We have to make our production to what’s happening in the automakers, which have largely shut down in Europe and the US.

“There’s not much point in selling metal for these low prices when there’s not much demand. All we’re going to do is oversupply the market,” Theron said.