South Africa’s Anglo American Platinum (Amplats) aims to save about 4 billion rand ($211 million) this year through cost cuts and reduced capital expenditure to offset production losses during a nationwide lockdown to fight the coronavirus.
The company has suffered a 7% drop in first-quarter output of platinum group metals (PGM) to 954,800 ounces, with 61,000 PGM ounces lost at its South African operations alone, hit by a coronavirus lockdown that started on March 27 and has been extended until May.
Amplats said it will seek capital expenditure reductions that support the updated production profile while ensuring long-term asset integrity. It will make further savings from cost cuts and reductions overtime payments and production bonuses for employees not at work.
Another member of the Anglo American group, Kumba Iron Ore, said it is also targeting cost savings, aiming for a total of 325 million rand, and would defer non-critical capital expenditure of 1 billion rand to bolster its financial position.
“These cash-preservation measures add to our liquidity position, which remains at levels similar to that at the end of 2019,” Kumba said.
Kumba’s total first-quarter iron ore production fell by 1% to 9.4 million tonnes because of lower output at Kolomela.
It now expects 2020 output to be between 37 million and 39 million tonnes, against previous guidance of 41.5 million to 42.5 million tonnes.
South Africa last week said it would allow mines to operate at up to 50% capacity after previously ordering most underground mines and furnaces to be put on care and maintenance during the national lockdown.
($1 = 18.9212 rand)
(By Tanisha Heiberg; Editing by Susan Fenton and David Goodman)