Platinum smelter shutdown will take up to 200,000 ounces off market

An incident at Angloplats’ big Polokwane smelter will mean it will be shut down while repairs are implemented and will cut Angloplats output by up to 200,000 ounces in the current financial year (to end-June 2009).

JOHANNESBURG (Reuters) - 

South Africa's Anglo Platinum (Angloplat) (AMSJ.J), the world's biggest producer of the metal, said on Wednesday it would lose up to 200,000 ounces of refined platinum after shutting down its Polokwane smelter.

Angloplat, which is majority-owned by Anglo American Plc (AAL.L), said it shut the smelter after an incident in which the furnace run-out at the smelter came into contact with rain water, resulting in "a significant release of steam and smoke".

Angloplat has said it aims to produce 2.4 million ounces of refined platinum this year, compared with 2.47 million ounces last year.

On its website, Angloplat said the smelter has a full capacity of 650,000 tonnes per year.

Since it was commissioned in March 2003, the smelter has processed concentrate from existing and new mines, and provides backup for Angloplat's Waterval and Mortimer smelters.

Platinum rose nearly 4 percent to $872.50/892.50 an ounce by 1550 GMT on Wednesday, partly as a result of the Polokwane news. Platinum has lost more than half its value in the last quarter on slow auto sales data and the outlook for demand from carmakers.

Shares in Angloplat closed more than 8 percent lower, underperforming rival Impala Platinum (IMPJ.J), which added nearly one percent.

Smoke was visible in the smelter's vicinity, the company said. South Africa's SABC News said on its website that part of the Polokwane smelter was on fire. Earlier a spokesman for Angloplat said it was investigating reports of a fire.

Emergency services were called into action, but no one was injured in the incident at the smelter located north of Johannesburg in South Africa's Limpopo province, the group said.

"As a result of the shut down it is currently estimated that Anglo Platinum's output of refined platinum in 2008 will reduce by approximately 150,000 to 200,000 ounces," Angloplat said in a statement.

DOMINANT

Angloplat accounts for about 40 percent of the global supply of the metal used mainly by the auto industry, which consumes more than half of the annual platinum output to make catalysts to clean exhaust fumes, and in jewellery.

South Africa accounts for roughly 80 percent of world platinum supply.

A spokesman for Angloplat had declined to confirm media reports that the smelter had experienced explosions or a fire, but said the plant had been shut down.

"I can confirm that the Polokwane smelter is shut down," Simon Tebele, a spokesman at Angloplat told Reuters earlier.

SABC News said on its website: "There is thick smoke coming from the (Polokwane) plant. Fire fighters are battling to extinguish the fire."

The Polokwane smelter was shut for weeks in February for electrical equipment repairs.

At the time it was shut, Angloplat had said the group had a smelting capacity of 3.5 million tonnes a year, and that despite the smelter being out of service the group had enough capacity to catch up on output once the smelter resumed operations.

Refined platinum output fell 11 percent in the third quarter to 543,200 ounces due to plant maintenance. In the first half to end June, Angloplat's refined platinum production fell 11 percent to 1,128,200 ounces, compared to the previous year.

(Reporting by James Macharia, editing by Anthony Barker)

© Thomson Reuters 2008. All rights reserved.

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