South Africa-focused miner Aquarius Platinum, the world's fourth largest platinum producer, said it planned to limit mining activities to concentrate on conserving cash and guarding its reserves until economic circumstances changed.
The platinum sector in South Africa, home to around 80 percent of known platinum reserves, is battling the impact of falling prices, weak demand, soaring costs and a government safety drive that has cut production as operations are suspended for safety violations.
“We seem to be one of the few companies in the platinum industry that is willing pro-actively to take the required tough decisions to close the mines,” Aquarius chief executive Stuart Murray said, referring to the three mines where the company has halted operations.
“I would hope that the other industry players follow suit and cut the unneeded production that is depressing the industry.”
Aquarius said on Wednesday that it would suspend all non-essential capital expenditure and focus on its Kroondal, Mimosa and tailings operations to maximise cash flow generation.
The company said it expected the price of platinum, a precious metal used to make catalytic converters in cars, to remain stagnant while operating costs continued to rise.
“In this environment, the only defensible strategy is to cut all non-essential capital expenditure, and place all non-contributing assets on care and maintenance while optimising profitable operations for maximum contribution in the current low price environment,” Aquarius said.
Anglo American Platinum, a unit of global miner Anglo American warned on Monday that its first-half earnings would fall more than 20 percent due to lower sales and falling prices.
Shares in Aquarius, which have crashed 66 percent in the last three months, closed at 51 pence on Tuesday, valuing the company at 226.3 million pounds ($355 million). - Reuters