Sibanye-Stillwater to declare force majeure on SA platinum output
JOHANNESBURG - Platinum producer Sibanye-Stillwater said on Monday it would declare force majeure on supply contracts for platinum group metals (PGM) after it temporarily closed its South African mines to comply with a three-week national lockdown.
South Africa is the world’s largest producer of platinum and a major producer of palladium and rhodium, used in autocatalytic converters.
“We are unable to supply (customers) with metal because now our operations have closed down so we will have to declare force majeure,” said Sibanye spokesman James Wellsted without providing detail on which customers.
Sibanye, however, said that the entire value chain of PGMs has been impacted by the spread of the coronavirus, including suppliers and customers, as demand from automotive customers for the metals has also fallen. The virus has infected more than 720,000 people and killed over 33,000 globally,
“This has impacted across the value chain, it’s not only one part of the value chain that has been impacted,” said Wellsted.
Demand for palladium and rhodium, widely used in vehicle exhausts to reduce harmful emissions, has climbed as tighter environmental regulations force carmakers to buy more of the precious metals for catalytic converters.
“The 21-day lockdown in South Africa, which would significantly reduce 2020 PGM production, should go a long way to offsetting the demand impact of the outbreak,” said Nedbank equity analyst Arnold Van Graan.
“This should ensure that the market is not flooded with unwanted supply while demand is low. This would contribute significantly to keeping the PGM market fundamentals intact.”
South Africa, which has more than 1,200 confirmed cases of COVID-19 and two deaths, imposed a 21-day nationwide lockdown from midnight on March 26, including requiring furnaces and underground miners to be put on care and maintenance, as it battles the spread of the coronavirus.