The current power crisis in South Africa was posing a risk to planned expansions, said CEO Neville Nicolau, who also cited safety, mining rights, environmental approvals and skills as other key issues in his plans to boost the company's production.
We need power for future projects and need to secure it now. Power is a problem and we have to try to agree with Eskom to get power supplies, Nicolau told Reuters in an interview.
State utility Eskom [ESCJ.UL] has been unable to meet power supply to South African mines, forcing them to shut for five days in January. The shut down could see output fall by 200,000 ounces this year, while other hiccups may dent output even further, metal refiner Johnson Matthey said on Monday.
Power supply in South Africa will remain tight with mines receiving around 90-95 percent of their requirements until 2012.
Nicolau, who takes over on June 1, said he is learning the platinum market having spent 30 years in gold mining, eight of those at AngloGold Ashanti .
I'm aware there is a very high level of future power needs, and I would be trying to find out what (power) is available. I have to understand the platinum market and what expansion plans are appropriate for Angloplat, in terms of power, mining licenses, people skills and environmental agreements, he said.
Angloplat, which produces about 40 percent of the world's platinum supply, has been criticised by analysts for falling short of its previous lofty production targets.
Angloplat which consistently forecast robust demand for platinum -- used in jewellery and auto catalysts to clean exhaust fumes -- said at its 2007 yearly results in February that is still aims at growing output at 5 percent yearly.
Angloplat's 2007 refined platinum ounces fell to 2.47 million ounces from 2.82 million ounces in 2006, mainly due to safety issues. This year, the company said output would be even lower at 2.4 million ounces, mainly due to the power crisis.
I will have to evaluate the company, the opportunities, the planned capital projects and come up with an appropriate target. If it means planning for 3.5 million ounces a year then that will be the target, but it has to be realistic, he said.
Nicolau said over and above the production expansion plans came safety, and this was a key reason for his appointment.
Nicolau, who replaced Ralph Havenstein who resigned on Aug. 31 over safety issues, said he agreed with majority-owner Anglo group's CEO Cynthia Carroll on a tough stance on safety.
Safety determines our moral licence to mine, he said. People don't come to our mines to die or be injured.
He said his two-pronged thrust would be to change workers attitudes towards safety and put in place new safety measures.
Last year a total of 25 workers died at Angloplat's mines.
On the price of the metal, Nicolau said fundamentals would keep it soaring. Spot platinum was trading around $2,150 an ounce compared with $2,139.50/2,159.50 on Monday.
Compared to gold, the platinum market is much smaller, and is driven by different fundamentals. It is highly consumed and is rare, so the price will tend to be high, he said.
Unless you change the fundamentals, and find an alternative, the demand will stay high. So I see the long-term future of platinum price being strong, more robust than gold, but a conservative guess would be around the $2,000 an ounce. (Editing by Ben Tan)
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