Amplats and Implats declare forces majeures, employees to be paid during lockdown
Anglo American Platinum and Impala Platinum have had to declare force majeure on some contracts. Most South African mining companies are probably in the same boat during the 21-day lockdown.
In a generic letter to suppliers obtained by Business Maverick, Anglo American Platinum (Amplats) says:
“We refer to the Agreement between the parties. In light of the Covid-19 crisis and the measures imposed by the Government of the Republic of South Africa… together with the announcement made on 23 March 2020 by the President of the Republic of South Africa, the Company’s performance of its obligations under the Agreement cannot be performed for reasons outside the reasonable control of the Company and therefore the Company is issuing this Force Majeure Notice and all obligations are suspended for the duration of the Force Majeure period.”
Amplats spokeswoman Jana Marais confirmed this was the case.
“Anglo American Platinum confirms that due to the 21-day lockdown period imposed by the Government of South Africa to halt the spread of Covid-19 in the country, it has moved the bulk of its operations to care and maintenance. As a result, we’ve unfortunately had to declare force majeure on certain supplier contracts for goods and services that fall outside the scope of approved essential services and the limited scaled-back operations we’re allowed to continue,” she said in an emailed response to Business Maverick queries.
The company also reiterated that it will “pay all employees their basic salaries and housing allowances and continue with Company contributions to medical and pension funds throughout the 21-day lockdown period”.
Amplats will certainly not be alone in this regard.
Rival Impala Platinum (Implats) said in a statement:
“Force majeure letters have been issued to all consultants and contractors for the duration of the lockdown, to legally suspend our obligations under these contracts. Force majeure letters have also been issued in respect of offtake agreements with both Group companies and third parties, as well as customer supply contracts, to legally suspend our obligations under these contracts.”
The company has also put all of its South African mines on “care and maintenance”, so they are no longer producing but have a skeleton staff to maintain the integrity of the operations.
“Management met with organised labour at both the national and branch level before the lockdown and agreed to continue paying all employees during the 21-day lockdown period. However, it was communicated to all stakeholders that alternative arrangements will need to be implemented should the lockdown period continue beyond the envisaged 21 days,” it said.
Both Amplats and Implats are fortunate to have relatively robust balance sheets after posting stellar earnings and so they can afford to make this gesture. Not every mining company will be in this position. BM