www.miningmx.com | platinum Anglo Pt warns on cost pressures

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Ralph Havenstein, CEO designate Norilsk Nickel Intl.

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Anglo Pt warns on cost pressures
Allan Seccombe
Posted: Mon, 12 Feb 2007

[miningmx.com] -- ANGLO PLATINUM will produce between 2.8m oz and 2.9m oz of refined platinum in 2007, but warns that wage talks with unions could affect its operating costs.

Anglo Platinum produced 15% more refined platinum in 2006, with output of 2.816m oz after it increased metal from its own mining operations and released pipeline stocks.

The cash operating cost per equivalent oz of refined platinum rose by just below 11% to R6,116 because of inflation, increased mine production and extensive ground support work at the Union UG2 declines.

vigorously address unit costs

Cash mining, smelting and refining costs jumped 15% to R15bn.

�Management continues to vigorously address unit costs,� the company said in a statement.

A two-year wage agreement expires in the middle of 2007 and talks on a new agreement are about to start.

�Operating costs and production may be affected by the outcome of these negotiations,� Anglo Platinum said.

Some 3,000 workers at the Modikwa mine, which is owned by Anglo Platinum and African Rainbow Minerals, have been on strike since end-January in protest against working agreements, alleged racism and wages, and the mine has lost at least R75m.

Unions are likely to push for above-inflation increases because of the strength of the platinum price and the very good results expected from the platinum companies on the back of that.

Anglo Platinum sounded another note of caution on costs, saying the engineering and construction sectors in South Africa are under pressure because of a rapidly growing number of projects.

�It is anticipated that this industry-wide demand on resources will affect Anglo Platinum�s expansion programme and associated costs,� it said.

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Anglo Platinum posted headline earnings, which strip out exceptional items, 194% higher than the previous year at R11.99bn. The world�s largest platinum producer paid a final dividend of R39 a share.

Anglo Platinum swung from a net debt of R2.3bn at the end of 2005 to a cash positive position of R4bn by the end of 2006.

�Our record financial performance was driven by strong demand, record metal prices and continued growth in production volumes. In this regard it is noteworthy that 26% of our 2006 revenue was generated from metals sold in South Africa, which are locally beneficiated," said CEO Ralph Havenstein.

Anglo Platinum has a long-term growth target of five percent a year and its outlook on the platinum price will see it continuing to pour money into its new projects.

�Anglo Platinum remains confident of the robustness of demand for platinum and is continuing with its expansion programme,� it said.

�The implementation of Anglo Platinum�s extensive suite of mining and processing projects to expand and maintain production continues on schedule,� it added.

The Marikana and Mototolo projects, which added 12,800 oz of platinum to the group�s output in 2006, will bring 74,000 equivalent refined platinum oz by 2009.

The PPRust North expansion project will add 230,000 oz of refined platinum oz a year from 2009.

�It is pleasing that in 2006 our board approved new capital expenditure to the value of R11 billion to extend the life of our existing production capacity, increase efficiency and support continued growth," Havenstein said.

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