ANGLO AMERICAN's Mogalakwena mine on the Bushveld's Northern Limb. Photograph: Anglo Platinum

ANGLO AMERICAN's Mogalakwena mine on the Bushveld's Northern Limb. Photograph: Anglo Platinum

Mechanised Platinum:
A Widening Divide

Issue 113, January 2015

Continued from Page 2 ➤

…his focus on safety had “distracted” him from pulling platinum from the ground. Lonmin repeatedly missed guidance, which fell to 725,000 ounces in 2008, versus the 1m ounces promised by Mills when he arrived in 2004.

In places, Lonmin's geology was simply not suited to mechanisation, with machinery unable to navigate pot-holes or undulation in the orebody. Lonmin was also hampered by machine reliability and a shortage of trained workers, which some analysts interpret as a euphemism for sabotage.

Mills looked like a banker, spent much of his time in London and was characterised as sitting in his shirt-sleeves in an office near Buckingham Palace. In 2008 he was ousted and R1.2bn ($140m) was spent de-mechanising Lonmin's shafts.

“We have taken the decision to change our approach,” Lonmin's new chief executive said.

Fierce Croc

Anglo American was meanwhile funnelling investment into Mogalakwena on the Northern Limb, breaking 100m tonnes of rock at the mine in 2008.

Mogalakwena (meaning fierce crocodile) is “the standout asset” in the sector, one London-based analyst says. The stability of its vast open-pit walls is monitored by radar, it has the largest hydraulic shovels in the mining industry and 40 per cent of its workforce is female. It is the lowest cost platinum mine globally and has avoided strike action, producing 370,000 ounces in 2014, according to figures released this week.

Perhaps not wanting to attract undue political attention, Anglo is coy in giving guidance from the mine, forecasting a “stable outlook going forward,” but analysts say output could double by the end of the decade.

Polarisation

Mogalakwena threatens to polarise the entire industry, mounting low-cost production on non-mechanised mines, already labouring under wage pressure and closures. Mogalakwena, in turn, would benefit from the distress, with closures supporting prices and increasing the giant mine's margins.

Lonmin is weighing the closure of its Hossy shaft, whilst Anglo American has closed three shafts at its Union and Rustenburg mines, which it plans to hive off through a sale or separate listing...

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