The world’s largest platinum producers Anglo American Platinum, Sibanye Stillwater and Impala Platinum have declared force majeure on contracts after a three-week national lockdown has forced operations to close.

South Africa, which accounts for around 70% of mined platinum, called the shutdown last week to to try to slow the spread of the coronavirus outbreak.

The measure triggered a downgrade by ratings agency Moody’s on Friday and will hit the country’s mining industry, which accounts for about 7% of GDP.

Miners have put many of their operations in care and maintenance and have reduced metal processing, while the coronavirus has also slowed demand from global car companies.

South Africa’s main ports have been shut, preventing the flow of commodities such as iron ore, coal and manganese.

The clause of force majeure, loosely translated as superior force, allows certain terms of an otherwise legally binding agreement to be ignored because of unavoidable circumstances.

“We are unable to supply (customers) with metal because now our operations have closed down, so we will have to declare force majeure,” Sibanye spokesman James Wellsted said.

Apart from issues in South Africa, Sibanye’s palladium operations in the United States have also significantly reduced the number of people working there.

Sibanye’s peer Implats also declared force majeure on all of its contracts on Friday, a source with direct knowledge of the matter said on condition of anonymity.

Implats spokesman Johan Theron declined to comment, saying the company would issue a statement later on Monday.

Amplats declared force majeure on supplier contracts for goods and services that were not essential services, spokeswoman Jana Marais said.

The miner, which is a unit of the global miner Anglo American, mainly operates mechanised mines in South Africa, where the majority of operations are labour-intensive and have deep shafts.

News of the lockdown drove platinum prices more than 20% higher last week, the biggest weekly jump on record. Palladium climbed 40% on the week while rhodium rose 61%.

Demand for palladium and rhodium, which are used to reduce harmful emissions, has risen as tighter environmental regulations force car makers to use more in each vehicle.

“The 21-day lockdown in South Africa, which would significantly reduce 2020 PGM production, should go a long way to offsetting the demand impact of the outbreak,” Nedbank equity analyst Arnold Van Graan said.

“This should ensure that the market is not flooded with unwanted supply while demand is low. This would contribute significantly to keeping the PGM market fundamentals intact.”

Fonte: MINING.COM