London - South Africa-focused miner Aquarius Platinum
[JSE:AQP], the world’s fourth-largest platinum producer, said it plans to
limit mining activities to concentrate on conserving cash and guarding its
reserves until economic circumstances change.
The platinum sector in South Africa, home to around 80% 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 proactively 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 expects the price of platinum, a
precious metal used to make catalytic converters in cars, to remain stagnant
while operating costs continue 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 Platinum [JSE:AMS], a unit of global miner Anglo
American [JSE:AGL], warned on Monday that its first-half earnings would drop
more than 20% due to lower sales and falling prices.
Shares in Aquarius, which have crashed 66% in the last three
months, closed at 51 pence on Tuesday, valuing the company at £226.3m.