Eastplats shares drop 18% after it shelves an expansion project

The company said it would shelve the expansion project for now, stopping work at its Mareesburg open-pit mine and the Kennedy's Vale concentrator plant, outside Steelpoort in Limpopo. Analysts believed more cutbacks would follow Eastplats' decision.

In January, Eastplats CEO Ian Rozier said the operation, capable of producing 100000oz a year of platinum group metals, would be completed within 12 months after the company secured a financing facility of $100m. Last week, however, he said that the decline of platinum group metal prices since the project was launched nine months ago, weakness in Europe - which buys half of SA's platinum output - soaring input costs and a volatile labour force had informed the decision to suspend the project, which was about 30% completed.

"These factors, and particularly the continued cost pressures we are experiencing in SA, make the platinum sector an extremely difficult space in which to operate," he said. "We do not envisage any significant large-scale production cuts from the larger producers and consequently expect the industry will have to contend with much lower prices than previously projected in the medium term," Rozier said, according to Business Day.

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