Valterra Platinum Limited (VAL) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to the Anglo American Platinum Investors and Media Call. [Operator Instructions] Please note that this call is being recorded. I would now like to turn the conference over to Chris Griffith. Please go ahead, sir.

Thanks, Claudia. So thank you for joining me and the Finance Director, Craig Miller; and also our Executive Head of Processing, Gary Humphries, for short -- at short notice for the call. Unfortunately, we had a material event at our Anglo Converter Plant, or as we know, ACP, which will impact our refined production and sales for this year. As you would have seen in the recently announced SENS and media release that we've announced the temporary shutdown of the ACP, which is an integral part of our processing chain. As we're unable to complete processing our material, this has led us to declare force majeure. There were a series of incidents and extensive attempts of mitigation, which were unsuccessful and ultimately led to the need to temporarily close the entire ACP. Firstly, the Phase A converter plant at Waterval smelter in Rustenburg was damaged following a cold dust explosion in the converter on the 10th of February. Very fortunately, nobody was injured in the event. And Phase A was shut down to secure a safe working environment and to begin the critical repairs, which is estimated to be complete in Q2 of 2021. As for the normal business processes, our Phase B unit, so we always have 1 of the 2 units in standby, was then commissioned to take over from Phase A. In the process of ramping up Phase B to steady state, we detected water in the furnace. We then proceeded to the extensive testing, and that was conducted to determine the source of the water with the most likely source being in the water cooling circuits of the furnace. After a number of potential leaking circuits were isolated, water in the furnace continued, however, to be observed. And this has led to a very high risk of explosion, and the company has had no option but to temporarily shut down the Phase B unit to ensure the safety of all employees and to avoid a catastrophic event. Phase B has thus been shut down for repairs, and that's anticipated to take approximately 80 days. As a result of the temporary closure of the entire ACP, Anglo American Platinum has had to declare force majeure to customers, suppliers of third-party purchase of concentrate and suppliers of tolling material, as we're unable to complete the processing of material during the converter repair. Whilst production from our own mines will continue and the concentrate from those mines will continue to be smelted at 1 of the 4 smelter complexes, production from our own mines as well as third-party material will not be able to be converted to final production whilst the ACP is undergoing repairs. Our initial estimates indicated this will have a significant impact on our refined production guidance. And as a result, we've decided to provide an indication of H1 2020, so the first half, refined production guidance as well as revising our full year revised production outlook. Our new H1 2020, while we've never given H1 guidance before, but so our guidance that we provide today for the first half is, in total PGMs, between 850,000 and 1.050 million ounces; platinum, 400,000 to 450,000 ounces; palladium, 300,000 to 350,000 ounces; and rhodium, 65,000 to 75,000 ounces. By the end of the year, we will expect to have made up some of that shortfall in refined production and to reduce the work in progress inventory. However, it will take us probably about 2 years to fully process this work, and that should be completed during the course of 2022. Our revised full year 2020 refined production guidance is total PGMs between 3.3 million and 3.8 million ounces. And we've previously guided 4.2 million to 4.7 million ounces, so you can see about 900,000 ounces will be impacted this year. Platinum, 1.5 million to 1.7 million ounces. That was previously 2 million to 2.2 million. Palladium, 1.1 million to 1.2 million, and that was previously 1.4 million to 1.5 million ounces. And in rhodium 250,000 to 350,000 ounces, and we previously -- that was part of other metals that are previously unguided. Our key priorities are clearly to get ACP operational as soon as possible without compromising on our safety standards and to seek to work with customers to limit the impact of these deferred shipments where possible. And to this end, we will be engaging directly with customers and other key stakeholders. So now, I will open up the line for questions for myself, Craig and Gary. Thank you very much. Operator?

[Operator Instructions] We have a question from Jason Fairclough from Bank of America.

Just 2 quick ones from me. Are you able to give any indication of the cost impact? Should we just be thinking about higher costs, or do those costs actually just get buried in inventory? Also I'm just wondering if you could give us a little bit of color around the working capital. If you've done any dangerous math on what sort of build of working capital we should think about in dollar terms?

Thanks, Jason.

So Jason, I don't have an estimate for you in terms of the cost impact at the moment. What we will do, if we are so required to do so we will provide an update around our unit cost guidance for the year and if there is a requirement for us to update from what we previously guided when we issued our results a few weeks ago. In terms of the working capital build, I don't have -- we don't have that just at the moment. But clearly, that it will be quite material for 2020. And then clearly, it will start to unwind into 2021 and 2022.

If I could just follow up. So you've declared force majeure. Does that mean that there are no penalties to be paid here except -- in as much as you'll have to take the cost of the repair itself? But in terms of your customers, you don't have any liability, any penalty to be paid to them?

Jason, we're obviously working through that at the moment and engaging with our customers. And so we've obviously got different contractual commitments with them. But clearly, the decision to declare force majeure was to mitigate any impact that could arise out of that.

The next question is from Chris Nicholson from RMB Morgan Stanley.

Guys, could you just -- I noticed the wording in the press release specifically talks to third-party POCs. So could I just confirm that you would continue processing, as a matter of priority, the material from Modikwa and Kroondal, which are obviously your JV share? I would imagine, secondly, that would be through Mortimer, if I might, could you just confirm that? And then finally, just to firm up my understanding of the ACP, can you still put the base metals through the BMR? Or does ACP just impact the PMR?

Thanks, Chris. The answer to your first question is that we are unable to treat any material through the ACP. And so just to explain how that works, all of the met that comes from all the furnaces, so the 4 furnace complexes all send their met, so the product from the furnaces go to the one point. So this is the sharp end of the funnel, and it all goes through the ACP before it can go to the BMR and then the PMR. So we are unable to treat any material. So we're not able to give any preferential treatment to any customer, for example, or even to our own material. So I think what we were clear to say, whilst we will continue mining and our own mining concentrate will go through the smelters, we actually can't even -- we can't put our own material through the smelters either. So it will affect all sources of supply, both own production, third parties or tolls -- and third parties include third parties and joint ventures, it will affect all of us for that period that we have, let's say, the 2.5 months' worth of shut. And so that concludes also then your second question, which says you can't bypass the ACP to be able to get to the base metals. So it will mean that all base metals and precious metals will be impacted for the duration of the repair of Phase B, which is currently estimated to be somewhere in the region of 80 days.

Your next question is from Patrick Mann from BofA.

I think following on from Chris' question, just in terms of the priority of metal, my understanding was that there's kind of a fixed period for tolling and POC where you assume it takes 3 months. And then -- so is there any -- does your metal notionally go to the back of the line? Or is it all done on a kind of pro rata basis here? So is everybody affected the same, I suppose, is the question. And then do you -- what are your refined or your final inventory balance is like? Can you -- should we assume that refined production guidance is going to be similar to the amount of metals sold? Or have you got anything in the cupboard that you can use to tide through this period? And then maybe the last thing is, is there no way to do toll refining yourselves or to perhaps sell concentrate or metal in process to somebody else who might have capacity?

Okay. So Chris, we -- I mean clearly, we will work within the force majeure provisions with our customers to work through the metal, and our anticipation is that we would pro rata, put everybody's metal through so everyone is treated fairly once we commence operations. But I don't think anyone goes to the back of the queue. I think that's the key point. We don't have anything in the cupboard. So we've given the sales, the refined and the sales guidance, and you can see they're very close to each other. So there's nothing in the cupboard that we will be able to sell more metal than we refine. And then lastly, on toll refining, I mean that's clearly now something that's -- that we have -- now that we've declared force majeure, now that we've notified the market, now clearly we can have some conversations with third parties to see if there's any potential to mitigate some of the losses that we've just announced. So we'll be going to our peers in the industry to see if there's any potential to do some toll refining.

The next question is from Richard Hatch from Berenberg.

Just -- first one is just are you expecting any impact on 2021 guidance at this point or perhaps you can just clarify that? And secondly, I suppose it wasn't disclosed -- the event wasn't disclosed before just because you weren't quite sure of the exact impact and the need to declare force majeure, just to be clear.

Okay. So on 2020 guidance. So I think it's a bit early for us now because we're going to need to understand the quantity of metal that we'll get through the course of this year, and then what our ability to catch up is in the following year. So that's still really early days for us now. And I think through the course, probably at H1, we will be able to give more guidance as to what that may look like in the catch-up. I think the real bottom line is that we are unlikely, in the fullness of time, to lose the value because we'll continue mining, and as far as we can, then that metal will still be available to be treated at some point. So -- but I think it just is a little early now, Richard, to be able to provide 2021 guidance, and we'll do that probably at the half year. And then the event was not disclosed, I mean we have now disclosed the event when the event became an event. So up to now, because we've got the 2 converters, the event in the first one, whilst that was a material event, but it meant that we could move over to Phase B, we have a second converter. And where we've had events between converters in the past, they haven't been notifiable to the market because we've had a spare converter and been able to manage that. The moment that we became unable to treat material through our second converter, clearly then, that was going to have an impact on our production and, therefore, an impact on the market. And that's why immediately we've notified the market. So the moment that -- it was only last night we just got a call over the Board this morning that we've decided and this is the course of action that we will be able to do. And then that's why immediately, we have notified the market.

I appreciate that. Glad no one was injured. And just to be clear, so should we perhaps -- do you expect some kind of update on CapEx impact in maybe the half 1?

Yes. So Richard, if there is a need for us to adjust the CapEx guidance and the unit cost guidance, we'll do that when we've got further information. So if there isn't -- certainly we'll be coming back to the market at H1. But if there's any changes, we'll certainly let everybody know. But the current expectations, the range for CapEx, I think we're okay with that for the moment. But clearly, we've got some work to do over the next few weeks. And if those change materially, we'll come back to you and let you know.

The next question is from Nkateko Mathonsi from Investec Bank.

Please just help me understand in terms of force majeure. My understanding was it needs to be an act of God. And so we just want to be clear that you can declare or you are able to declare a force majeure even though it's not an act of God. I also wanted to get a little bit of clarity in terms of the extent of damage on the A converter. How long do you expect the A converter to be off-line? And the third question is, what is the probability that the B converter takes longer than 80 days?

Okay. Nkateko, thanks very much for the question. So yes, force -- acts or God are force majeure events, but there are other events including explosions that are covered in the force majeure provision. So in this particular case, we believe that now, due to those circumstances, we are unable to fulfill our contractual obligations and therefore declaring force majeure. So no, it is one of the provisions within the force majeure clauses in our contract. On the Phase A, it's currently our anticipation that it will take until about the second quarter of 2021. I think that's still a little bit conservative at the moment, and Gary's team are certainly working at trying to bring that forward. But at the moment, most of what takes up that time is the production of the high-pressure coolers. So it's actually the long lead items as opposed to the time that it takes to actually install those things. So those are the things that -- as we stand now, I think our guidance is second quarter of 2021. And -- but clearly, in that process, we'll be trying to say are there ways that we can bring back the unit to sort of like basic readiness, if we could, to be able to -- if we had a potential issue in the future, to be able to switch over earlier. But as it stands now, second quarter 2021. And then the 80 days, again, that's probably our best guesstimate now being slightly conservative. But I think Gary will not like me to say that he thinks we can do that a bit earlier. I think we -- it's really early days. Now the team are planning, to the minutest detail, now the repair. We've got to rebuild the half, and we've got to move across the coolers from Phase A into Phase B. And then in the meantime, in the background, we'll be manufacturing also in long lead items the spare coolers for Phase B. So that process is underway. It's our best guess at the moment. But we've not been -- that's not our overly aggressive guess as to what this could look like. But 80 days, we think, is a realistic guideline of what it will take us to repair Phase B.

The next question is from Jana Marais from Anglo American.

Yes. For now, it's from Felix Njini of Bloomberg. Sorry, he used my log-in details to dial in. So Felix, can you proceed?

Chris, are you able to name some of the local companies that you're toll refining the metal for, just to confirm?

Yes, they're all our normal partners, Felix. So Sibanye, Siyanda ARM and who else?

RB Plat.

And RB Plat. Those are the parties that we treat material for.

The next question is from Myles Allsop from UBS.

Just [ wanted to ask ], when you restart the ACP, will you have any flexibility as to which products you produce? Clearly, there's a much bigger deficit on the palladium side and rhodium side than on the platinum side. So can you kind of try and produce more of the PGMs that are wanted? And then the second question is just more looking at the second converter. When was that last used? Is there -- have you been underspending on CapEx in sort of over the last few years now?

So the answer to your questions, Myles, thanks for that, is no, you can't differentiate the metals. So the metals come out in the basket. They'll go through the ACP. We'll then take out the base metals first and then you've got the rest of the precious metals. And then through the process, they sort of go through a big -- a long sorting machine. And depending on the part of the process you're in, it will either drop out platinum, palladium, rhodium and the other precious metals. So they've each have a sequence that they get dropped out in. So you can't prioritize, for example, to selectively drop out more rhodium or selectively drop out platinum first. Then you've got -- they've all got different times that it takes to drop out of the process, and that's all as part of one long sorting machine. And then secondly, your question on CapEx is, no, we don't think we've been underspending our CapEx. As a matter of fact, over the last 5 years or so our spend on CapEx in the processing division, but in particular around smelting, has risen materially as we've put our smelters on to very rigorous and brought forward some of the timing of our smelter rebuilds. So we would argue that no, we haven't been underspending our capital as opposed to rather we've been spending a bit more on CapEx on processing and smelting than we had in the past. And about a year ago, we switched over to Phase A and Phase B was running at that particular time. So there was absolutely no issue. And we had introduced some new designs into Phase A. So we wanted to make sure that we had Phase B on standby, just to make sure if there were any issues with the new designs that we'd be able to switch back across to Phase B at any time, which is what we were doing now. So no, again, we have just spent a very significant amount of money on Phase A and have upgraded it in a range of different ways to make sure that it has the latest technology, has the latest designs. And at the right time when we felt confident enough, we would then start bringing some of those new designs into Phase B as well. So no, Myles, I don't think -- while I'm convinced that we have not been underspending on CapEx. And this has not been the event, either the coal dust explosion portion, all of this issue now with the leaking out of the converters have not been underspend of capital issues. The issue with the water leaks now, the reason that we're stopping is just because we can't isolate and detect the source of that water. And so rather than take a chance -- because if we have an explosion with water in that furnace, then we will be out for more than a year with no production from Anglo Platinum. So I think it was much more prudent both for the safety of our staff and also for the expedited delivery of material to rather stock and repair Phase B, and we'll be in production a lot faster if we do that, but it is going to mean that we need to shut down for a period of time. But rather than take the risk, both for safety or for the -- for having a catastrophic event, we decided to make that call now.

Okay. And is Phase A and Phase B the same size? Or if you got -- I mean is Phase B bigger than Phase A and such?

I think they're the same size. Gary, can you confirm that?

Yes, Chris. They're identical or largely identical units, the same in throughput capacity. But of course, A is more recent vintage because we'll rebuild [ efficiently ]. Yes, thank you.

The next question is from Emily Gosden from The Times.

First of all, I just wonder if you could tell me -- I wonder, first, if you could tell me for each of platinum, palladium and rhodium, how much of the global market does this take out this year?

I don't know. Emily, can we get back to you on that? I mean we know the data but just offhand won't be able to reel that off. But we can certainly provide that data to you in the next couple of minutes. Emma Chapman will be contacting with you.

And in terms of the kind of causes of this. I mean you just said it's not underspend. But does this not kind of suggest some pretty serious safety savings? I mean presumably, the coal dust buildup, I mean you should have processes in place to stop that. And you're saying a number of potential leaks isolated. You kind of -- it sounds like you're still not sure where it's coming from. Does this not suggest some kind of pretty serious safety issues?

No, I would argue that it's because of the need for ensuring safety that we're taking the actions that we are taking. One of the things that you want to avoid at all cost to the smelter is that you don't get water in fuel smelter. And the moment that we detected water in the furnace, Gary and his team over the last 2-odd weeks of -- have been spending extensive amount of time pressure-testing the cooling systems. And remember, the cooling system sits in the middle of big thick copper blocks, so it's very difficult. You can't see it, for example, from the inside of a hot furnace as to where leaks are coming from. But you can pressure-test them with water to ensure that your systems are of intact. And through this process, we have identified some areas that a few we were able to isolate and still be safe. But when Gary and his team detected water in that furnace, we were unable to know where it was coming from. Rather than take a chance, we've had to stop that. We will take those coolers out, replace them with others and then we will do tests on those coolers that we've taken out to determine where the leaks have come from. That is exactly for the reason that we want to be safe that we've taken the course of action that we have.

I just wanted to know how many employees you've -- there are at the plant that's had to be evacuated or whatever. And just to differentiate between the 2 explosions you've had, you're saying that the second one with the water in the furnace poses risk of a catastrophic event. Was the first explosion in, say, A, like much more mild? Could that have been catastrophic with people just happen to not be in the wrong place at the wrong time?

So I'll let Gary talk to you as well. I'll just make a point, is that we've got protocols in place that we call critical controls that, for example, when we are starting up a new phase, and that's what was happening on the Phase A when we had the coal dust explosion. But when you do start at that time, then all people are removed from the furnace floor. So there's nobody there at the time. And when we did the start-up -- it's quite a convoluted explanation as to how we had the coal dust explosion. But we were feeding coal into the furnace, when the furnace launched -- at end of the launch, the heat -- the fire at the end of the launch went up. There was still continued feeding, that it was not noticed that the fire had gone up and there was a buildup. And when the fire came back on in the launch, there was coal in the converter itself, and there was an explosion contained within the converter. But nobody is allowed near the converter during start-up processes. And it was exactly because of our safety protocols in place that nobody was hurt. So again, on both counts, I think our safety processes have meant that nobody has been exposed to these events. Gary, I don't know if you want to add anything to that?

Chris, I think you've covered it adequately. I think the important thing is the start-up protocols or the launch ignition protocols, I mean withdraw people from the operation. We understand that it's a high-risk procedure, so we withdraw people from the area. The thing about the flame-up is that we had also what's called a positive pressure event at the same time into -- a blower downstream which had come online, and as a result of that we had the puff of coal dust. So I guess a lineup of 2 or 3 issues which caused the coal dust explosion, the flame-up and the ignition and the back-up of coal dust from the blower downstream. I won't go into too much more detail on that. The important thing is that nobody was injured and we've taken the right decision regarding Phase B.

Thanks, Gary. Emily, does that answer your question?

The next question is from Ephrem Ravi from Citi.

I just want to know if there were any insurance claims that you could kind of get some money from as a result of this. Is the whole process insured?

Yes. If I'm -- just in terms of the insurance, we have engaged with our insurers. A loss adjuster has been appointed. We'll obviously go through the process in terms of business interruption, and it's something that we're working on as a group at the moment. And so yes. So that has taken place. So in terms of your second question, around the restart. There's clearly a protocol that we need to follow in terms of the legal agreements, but our intention is certainly to try and treat everybody as appropriately as possible, that we're able to do within the framework of the agreement. But that's obviously something that we'll now be working through with the various parties over the coming weeks.

Just on the first, insurance. Can you just give us an order of magnitude? Is it in the tens of millions of dollars or is it hundreds of millions?

Yes. So look, I mean as I said, the loss adjuster has just been appointed, and we'll work through that. And as Chris outlined a little bit earlier, the impact for us in terms of production, refined production and, effectively, sales is about 900,000 PGM ounces lower than what we had previously guided. At current spot prices, that equates to about ZAR 18 billion lower EBITDA than what we would have realized or roughly $1.1 billion. Clearly, the impact at the half year will be more significant. I think that the increase is around that to about ZAR 24 billion at the half year, $1.6 billion. But as Chris said, we will look to mitigate that in the second half as we reduce the full impact of the lower refined production and sales. And therefore, the full year impact on EBITDA at current spot prices would be about ZAR 18 billion lower or ZAR 1.1 billion (sic) [ $1.1 billion ]. And all of these are obviously taken into the mix as we go through the discussions with the various stakeholders.

Next question is from Arnold Van Graan from Nedbank.

Just a follow-up on the earlier question around third-party material. I just want to make sure I properly understand this. So will you be turning away third-party concentrate? Or will you still be smelting that concentrate, accumulating the met? Or does it imply third-party material will accumulate in a concentrate form off-site?

So the answer to that question is, Arnold, is that's something we'll have to work together with our third-party deliveries to determine. As it stands now, the force majeure notice will be notified to third parties to say we can't accept any concentrate because we can't deal with it, because at the receipt of concentrate, that ownership transfers. There may, however, be a discussion to be held with third parties to say if we get some of that material in and get it smelted, it will reduce some of the pipeline and then the payment terms for some of the contracts could be reduced. That's detail, though, that will have to be discussed with third parties. But as it stands now, force majeure will indicate that the company cannot accept material. But then the provisions of force majeure mean that you will try and work with third parties to mitigate some of those effects as far as possible. And some of the things that you mentioned may be part of that mitigation that we can consider.

The next question is from R. Hochreiter from NOAH.

Chris, sorry about your misfortune. Did I get the number correct, 900,000 ounces of 6E for the year? Is that the right number that you will...

That's the right number, René, yes.

Okay. So about half of it is...

Refined. Refined.

Refined and sales.

Refined...

Just to be clear, refined and sold, yes.

About half of that is platinum, so that should put the platinum market into a deficit for the year. And a quarter that is palladium, so that should put the palladium deficit into more than 3 million ounces for the year. Have I got the sort of forecast numbers correct?

Yes, René, I don't think we want to talk about that. I mean at the moment, what we're trying to do is make sure we can get metal to the market, get metal to our customers. This is not about trying to have increasing deficits of metals. Exactly what that will look like in what's turning to be a pretty uncertain time in the world at the moment, we're left to see how that pans out. But I mean our major focus is for our customers. To get going as quickly as we can. So those that supply material to us, we can take that material as quickly as we can. There's other businesses that rely on us. And at the same time, there are customers that need our metal and we're trying to get back as quickly as we can. What the implications on the market will we, we'll have to see.

The next question is from Liam Fitzpatrick from DB.

Two questions from my side, just wanted to confirm in terms of mine or concentrate production. So you're saying there's going to be absolutely no slowdown in terms of your production levels and that will fully build up on the balance sheet through to the first half? And then secondly, I know you don't want to comment too much on the market. But what is your sense in terms of the market's ability to absorb this over the next 2 to 3 months? Do you think there are sufficient stockpiles throughout the supply chain to avoid production cuts further down?

So as it stands now, I think there is an important point, is that the plan is still to continue mining as much as possible so that the metal is not lost to the market. And as quickly as we can catch up, we will. So I think that is a good point. And as far as we can, we will continue. And my guess is -- although I can't speak for the third parties, my guess is that we will be able to -- my guess is the third parties would also seek to continue mining. And so that when they can be, on a fairly even basis, supply to us, they will. And then the final point around the market is that we contractually have about 60% to 70% of our volumes are contracted, and it's still our expectation that we will meet our obligations for the year to our current contractual customers. And then -- I mean clearly, there is still -- in the greater scheme of things, still the ability for the market to be more evenly balanced through the substitution of platinum back into palladium. We all know that it's probably going to take a bit more time, but there is -- combined between the metals and ability to supply all the metals to our customers that they need.

The next question is from Sergey Donskoy from Societe Generale.

I have just one question left, and I'm sorry if it was asked at the beginning of the call. I understand that you will be accumulating some inventories even if you increase processing in the second half of the year. And I appreciate it's too early to give any guidance for 2021, as you mentioned before. But just for us to understand the flexibility that you may have, what sort of a headroom will you have in this system, assuming that Phase B will be back and running as it's supposed to be, to increase production above the level that was supposed to be kind of churned out in 2021, in terms of kind of a -- what sort of a spare capacity do you have to run through this backlog of mine concentrate?

Thanks, Sergey. So we haven't provided them. There are certainly some of the things that we're still busy working on at the moment. But I think if we said that we would catch up to the 900,000 ounces in 2 years, and roughly, I think you should just take half-half at the moment just to get a feel for what some of that catch-up may look like, and then we'll give more definitive guidance at the half year. Gary, would you have any problem if Sergey used that sort of rule of thumb?

Yes, I think that's a pragmatic answer at the moment. Obviously, the chain is very complex, and it depends on agreements in terms of what concentrates and -- we produce or not -- do not smelt. If they come in later, then obviously they have a bottleneck in different parts of the process. So I think half-half over the next few years is pragmatic.

We have a follow-up question from Patrick Mann from BofA.

I just realized your previous guidance didn't include the tolling answers. So you've cut the -- this total guidance, I just want to check, it's your own mines and purchase of concentrate. And I just want to get a feel, because of the impact from the market, how many tolling ounces you were expecting and then now what you're expecting to be able to produce.

So Patrick, I'll tell you, let me get back to you on that. I just want to think through, because some of that clearly will depend on what our anticipation is of catch-up in the second half of the year. If we can't give any more definitive guidance than we have now, we'll let you know. But as it stands now, I mean clearly, there's an expectation that through our third parties, we would try to catch up as quickly as we could. Exactly what that looks like, my guess is going to have to also come out between -- in discussions between ourselves and our third-party suppliers in the next few days and then we'll probably be able to get a feel. I think for our -- currently as it stands, I think that's about the best guidance that we can give now. But maybe [ I'll take a look ] with the team if we could -- if there's anything else we need to say and we'll get back to you on that.

Okay. But just to make absolutely sure, that 900,000 is not including Sibanye, so the biggest tolling customer. So that 900,000 is just the Amplats mined and POC.

That's correct, Patrick. It's on a like-for-like basis. So exactly how the 4.2 million to the 4.7 million was determined, it's exactly the same as 3.3 million and the 3.8 million is on the same basis.

The next question is from Adrian Hammond from SBG.

Yes. I have a question for Gary on Phase B units, how long can you run that for uninterrupted? In other words, if you require any maintenance work to be done, one of the first points you need that to be? And then for Chris, just are there any savings measures you can implement to offset the lost sales, please?

Chris, should I go first?

You go, Gary.

So once the repair to Phase B is done, once we've got the coolers in place, there should be no impediment at all to running Phase B. And tolling, as it appears, to Phase A are complete. And that is what our plan is, to change over to the good rebuilt unit as soon as we can. And getting that to quarter 2 2021 is certainly not going to be or shouldn't be any difficulty for us.

Adrian, just want to say -- thanks, Gary. On savings, as it stands now, we are still planning to run normally. So all of our normal improvement projects, et cetera, at the operations, we would expect all that to continue. I mean clearly, there will be additional costs. Craig spoke a bit earlier about how much of that gets picked up by insurance, all that we're very unsure of. I mean clearly, there will be some extra cost of processing that we'll only know in the next couple of months what that looks like. But for the rest of the business, we're hoping to run as close as possible to normal. And certainly in the mining production, continue mining, continue the normal focus, get that material, put it through the smelters and get the smeltered met ready to be able to be processed at ACP as soon as it's up and running. So hopefully, for the rest of the business, it will be business as normal. But clearly, this is going to be an unusual situation, and you can imagine that we'll be turning over again every penny that we have to make sure that where there's possibilities of savings we would be. But for the rest of the business, for example, what we're not going to be doing is trying to send people home for a couple of months at the mines or something, because if we lose the value of the mine, the material, ultimately, we would lose that value forever. And it still is our anticipation of being able to get that metal to market, to get that metal to our customers that need the metal. So yes, we'll be turning over every penny. But at the moment, it's -- for the rest of the business, hopefully, business as normal.

And just to understand the 900,000 ounces reduction, that 2-year unwind of that, is that effectively being cleared by what is spare capacity in your system to make that up?

Yes.

It's not just a normalization of your inventory?

No, no.

No. No, this will be a bulk of inventory that where we've got some capacity, we would use that capacity to unwind the inventory.

The next question is from Allan Seccombe from Business Day.

Chris, could you tell you me, Natascha Viljoen is your replacement. She's head of Processing at Anglo American. Is she involved in this process at all?

The answer is absolutely. Natascha's on the line, if you want to say hi. So Natascha's been working very closely with us, and she officially takes over on the first of April. But we've been working very closely together, and she and Gary have been working very closely together to ensure that we all linked up, tied up and that in the handover to come, that Natascha's 100% up to speed. You're happy to confirm that, Natascha?

Hi, Chris. Hi everybody here. I can actually confirm that.

And then a second one from me, if I may. Chris, and to -- I mean [ as much as your view of your peers ], is there still capacity in the converters and refiners to take your material? Any idea of how much that might be?

And the answer is we don't know. I mean clearly, we know where we think some of that potential may be. But I think we would -- the answer is we don't know, Allan. We would have to start engaging with our peers to see if they've got any ability to pick up some of the slack. But we haven't -- clearly, we haven't been able to have that conversation yet because this is such a recent event. And clearly, we need to advise the market. We've now advised the market, now we could go to peers and throw that in a conversation. But we just don't know the answer to that question yet.

Are the refineries in Europe or the States that you could call on as well? Or are those too small?

I think the answer generally is that they are too small and are not really configured for the metal that we have. But I mean clearly, Gary over the next over the next few days is going to be doing exactly that, calling everybody with -- from a blowtorch to a furnace to see if there's something we can do and get help with.

We have a follow-up question from Sergey Donskoy from Societe Generale.

Just one more small thing, just to make sure the numbers that we have are correct. If you could remind us, what was your plan in terms of third-party tolling volumes for this year before the emergency? I understand if you don't provide guidance for what it might be now, but what it was before would be helpful.

Yes, Sergey, we don't provide that guidance. It's dependent upon the receipts that we receive, so -- yes, so that's the reason why we don't provide that guidance, and we'd have to direct that question to Sibanye.

Okay. Guys, I think we're going to have to call it a day. And to the operator, thank you very much for the time given to us to be able to take questions on what's clearly a very difficult situation for us. But if you would like to -- if there are any further questions, I urge you, if it's media questions, please reach out to Jana Marais; and if it's IR questions, please reach out to Emma Chapman, and we will be able to get back to you. So thanks very much, everyone. And thanks, operator. Thanks, Gary and Natascha, for joining us as well.