Angloplat upbeat about 2009 bottom line

Reuters | Mon, 18 May 2009 15:54

[miningmx.com] -- Anglo Platinum, the world's biggest platinum producer, expects to be able to at least break even this year at current prices despite the sharp economic downturn.

"Clearly cash flow positive and breakeven, those are important minimum standards," Chief Executive Neville Nicolau told Reuters in an interview in London on Monday.

"Certainly with prices where they are at the moment, I'm confident we'd be able to do that."

Some analysts have forecast that the South African firm, majority owned by mining group Anglo American Plc, will post losses this year due after prices collapsed from peaks last year of over $2,000 per ounce.

Spot platinum was trading around $1,100 per ounce on Monday afternoon.

Nicolau said the company was having success with its cost management programme, having cut unit costs by 7 percent in the first quarter.

"We forecast to maintain (last year's) cost levels for this year and at the moment we are certainly achieving that... and it's looking positive for the year," said Nicolau, who was in London for Platinum Week.

"We are using the current economic downturn to influence our mindset in terms of cost management."

POTENTIAL FOR HIGHER SALES

Labour accounts for slightly over half of overall costs and the group has said it plans to lay off up to 10,000 workers this year, mostly contract employees.

Wage negotiations this year were not expected to result in the problems of some previous years when strikes had brought mines to a halt.

"I think there are positive industrial relations and that would make sure that we do not have the disruptions that we've seen in the past," Nicolau said.

"We don't look at wage increases at a win-lose equation. We look at improving productivity to compensate for wage increases."

The company was sticking with its yearly production target of 2.4 million ounces, but has the potential to sell more than that by utilising material from its refining pipeline, he said.

"If the market demanded a higher number than 2.4, we have a little bit of capacity to deliver into that... 150,000 (ounces) is what we could probably squeeze into our pipeline."

At the end of last year, Angloplat's pipeline contained 170,000 ounces of platinum, he added.

Production problems, which have plagued the group in the past, were becoming less frequent.

"It's not that we don't have mishaps... but we seem to be able to get over these mishaps a bit more efficiently than we did in the past."