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| Significant deterioration in safety performance |
| MINING OPERATIONS |
| A significant deterioration in safety performance
occurred during the first half of 2007 with 18 fatal
incidents, 12 of which occurred at Rustenburg Section.
As a result, production at all Rustenburg shafts was
suspended for seven days on a staggered basis. The aim
was to ensure that all employees fully understand the
principles and accountability underlying all safety
standards and that safety is the overriding priority.
Initiatives and programmes were identified to address
factors that had contributed to the safety deterioration.
The interventions provided valuable insight into all
operational areas and further improved the
implementation of Anglo Platinum's new approach to
safety. |
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A marked improvement in safety performance occurred
during the second half of the year at managed mining
and retreatment operations, with the lost-time injury
frequency rate reducing to 1.94 compared to 2.72 in
the first half of the year. Regrettably, there was a total
of 25 fatalities (including three at projects) at Anglo
Platinum's managed operations in 2007.
Production of equivalent refined platinum production
(metal in concentrate less smelting and refining losses)
from mining operations owned by Anglo Platinum and
its share of joint venture mines declined by 6% to
2,471,400 ounces in 2007 from 2006. The intervention
aimed at achieving a significant improvement in employee
safety as well as reduced production efficiency in 2007
as a result of a shortage of skilled labour, competition for
labour at all levels, strike action at joint ventures, the
unsettled labour situation associated with wage
negotiations, electrical power disruptions and lower
grades at Potgietersrust contributed to the decrease in
production. Higher production was recorded at
Mototolo, Marikana, Twickenham and Western Limb
Tailings Retreatment, with Mototolo and Marikana still in
ramp-up phase.
Labour disruptions associated with contract labour
occurred throughout 2007 across all Anglo Platinum's
owned and joint venture mines, which had a significant
impact on production.
The aggregate immediately available ore reserves for
managed operations decreased by 10% to 14.3 months
at 31 December 2007. The production difficulties at
Rustenburg Section were the main contributor to this
reduction. The immediately available ore reserves at
Amandelbult Section decreased marginally, while Union,
BRPM and Lebowa mines improved their reserve
positions.
Total cash on-mine costs for mining and retreatment
operations increased by R3.1 billion or 24% to
R16.1 billion in the year due to substantial inflationary
pressures, above-inflation increases in wages, diesel and
tyres, chemicals and grinding media, costs associated
with the safety intervention, increased support costs
and ramp-up costs at Mototolo and Marikana. In
addition, a higher labour complement to support a
planned increase in production at mining operations in
2007, which did not transpire, further contributed to
the increase in unit costs.
The percentage of UG2 ore mined continued to
increase and ended the year at 59% of mined production
compared to 54% in 2006. This resulted in lower 4E
head grades. The increased costs, lower production and
lower grades resulted in cash on-mine cost per equivalent
refined platinum ounce increasing to R7,232, up 36% on
2006. The cost per tonne milled rose by 31% to R388.
Increased production volumes were recorded at: |
| • |
Mototolo: The joint venture delivered its first
production during the last quarter of 2006. In 2007,
the operation contributed 95,200 ounces of
equivalent refined platinum production of which
47,600 ounces were attributable to Anglo Platinum
with the balance purchased in concentrate from the
joint venture partner. |
| • |
Marikana: Equivalent refined platinum production
attributable to Anglo Platinum increased by 81% or
10,400 ounces. Marikana remains in ramp-up and is
expected to continue increasing production to a
steady-state production level of 74,000 equivalent
refined platinum ounces per annum. |
| • |
Twickenham: Reported separately for the first time
in 2007, mining at Twickenham produced 9,300
equivalent refined platinum ounces, compared to
6,400 ounces in 2006. |
| • |
Western Limb Tailings Retreatment: Equivalent
refined platinum production increased to 45,300
ounces with improved concentrator recovery due
to increased stability of the ultra-fine grinding
circuit. |
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| Lower production was recorded at: |
| • |
Rustenburg: The mine recorded 16 fatalities in
2007, with 12 occurring during the first half of the
year. This resulted in more unplanned remedial
work stoppages. Labour disputes among contractors
during the first half of the year, high labour turnover
and the employment of novice workers markedly
reduced labour efficiencies. Consequently, a 20% or
167,800 ounce decrease in equivalent refined
platinum production and a significant decrease in
primary development, which prevented planned
improvement in key underground metrics,
occurred. |
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Amandelbult: Equivalent refined platinum production
decreased by 3% or 18,500 ounces. The decrease is
attributable to lower grades as a consequence of an
increase in the UG2 component of tonnes milled
and the continued low grades encountered in the
transition zone on the Merensky horizon. The
stockpiles of UG2 ahead of the concentrator, as
reported at the half year, have been depleted with
stockpiles currently running at normal levels. |
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Union: Equivalent refined platinum production
decreased by 2% or 7,300 ounces. The lower
output was caused by power and labour disruptions,
safety stoppages associated with re-organising mining activities at the declines following the
replacement of contractors in the first half and
stoppages for safety training as part of the Group
safety intervention programme. |
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Potgietersrust: Mining at the new PPRust North pit,
which started in December 2006, continued in
2007. In the area mined during 2007, the effect of
oxidised material affecting process recovery was
more extensive than originally anticipated.
Unscheduled mill and crusher maintenance resulted
in lower volumes milled which, together with the
impact of the oxidised material on recoveries,
reduced refined output at Potgietersrust in 2007 to
163,500 ounces. |
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Bafokeng-Rasimone: Mill breakdowns during the
second quarter, strike action by contractor employees,
difficult ground conditions and safety work stoppages
resulted in equivalent refined platinum production
decreasing by 11% or 24,200 ounces. |
| • |
Lebowa: Equivalent refined platinum production
decreased by 11% or 11,300 ounces. This was due
to power outages, high labour turnover and resultant
labour inefficiencies. |
| • |
Modikwa: Labour unrest in the first quarter of 2007,
which included a protected strike that lasted 25 days,
severely hampered production during the first half,
resulting in the decrease of equivalent refined
platinum production by 13% or 17,500 ounces
compared to 2006. |
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Kroondal: Total equivalent platinum ounce
production at the Kroondal Mine, a joint venture
with Aquarius Platinum, declined by 5% to 130,200
ounces due to labour disruptions, safety stoppages,
lack of skilled resources to maintain mechanised
equipment and a lower built-up head grade. |
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| Mining operations are taking place at the Pandora Joint
Venture, in which Anglo Platinum has a 42.5% stake,
where an ore sale agreement is in place with Eastern
Platinum. Pandora delivered 895,000 tonnes of ore
during 2007, which yielded some 76,622 equivalent
refined platinum ounces. This production is excluded
from the Anglo Platinum reports. |
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| CAPITAL |
| Total capital expenditure on the Anglo Platinum mining
and concentrator operations and its share of the joint
venture mines in 2007 was R9.3 billion, up 66% from
R5.6 billion in 2006. Expansion expenditure of
R4.7 billion (R1.7 billion in 2006) was incurred largely
on the PPRust North project (mining and concentrating)
and the Paardekraal 2 shaft-sinking project. Ongoing
mining and retreatment capital expenditure was
R4.6 billion. |
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| OUTLOOK |
2007 was a year of consolidation at most operations,
with the exception of the mines in ramp-up phases
and Rustenburg Section where output reduced
considerably.
It is expected that equivalent refined platinum
production from operations will improve, both from
expansion and existing operations in 2008. The
establishment of sufficient face length for injury-free
sustainable production will continue to be a priority in
2008 and is expected to improve at virtually all
operations, with the exception of Rustenburg Section
where it will remain a constraint.
The significant above-inflation cost pressures
associated with increasing key input commodity costs,
electricity and labour costs are expected to continue
throughout 2008. From a labour perspective, 2008 is
expected to be a more stable year following the
implementation of the wage agreement during 2007.
This agreement allows for an 8.5% increase in wages
in July 2008.
The change in the Anglo Platinum labour strategy
referred to in 2006 was substantially implemented
during 2007 and will be progressively completed during
the next three years. The strategy advocates the
optimal deployment of own employees and contractors
based on core and non-core activities.
The global supply of tyres for heavy earthmoving
equipment has been erratic since 2006 and this trend
is expected to continue in future, raising the risk of
achieving production targets at the Group's mechanised operations, especially PPRust. Anglo Platinum continues
to pursue risk mitigation measures with Anglo
American plc. |
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