Angloplat maintains target, sees market deficit

[] — ANGLO PLATINUM reiterated its output target of 2.5 million refined platinum ounces for this year despite a quarter-on-quarter fall in production and said it expects the market to be in deficit this year as a recovery in demand outpaces moderate supply increases.

Anglo Platinum, the world’s largest supplier of platinum, produced 446,700 oz of refined platinum in the first quarter of 2010, some 42% less than the last quarter of 2009 because of the rebuild of the Polokwane smelter. Output was 11% higher than a year ago when demand fell precipitously because of a global economic crisis.

“Anglo Platinum remains confident that it will meet its production target of 2.5 million refined platinum ounces for the full year 2010,’ it said.

Anglo Platinum CEO Neville Nicolau told reporters earlier this month that the buoyant market for the metal may cause the company to lift production between 150,000 oz and 200,000 oz this year above the 2.5 million oz target.

“Q1 is typically the weakest quarter for the platinum division but we are somewhat surprised by the extent of the fall in production,” JPMorgan Cazenove Europe Equity Research said in a note.

Net debt as at end-March was R8.8bn. “The current debt position is higher than the previously indicated R6.8bn but is expected to decrease as working capital movements take effect.”

Anglo Platinum has undergone a major restructuring, shutting three marginal shafts producing 140,000 oz and cutting some 19,000 jobs. It reckons it will maintain costs just above R11,000 per equivalent refined platinum ounce for a third year running in 2010.

Productivity at its operations has stepped up, with the quarterly performance 4% higher than the December quarter and 17% above the same period a year earlier.

“Most reassuring from an operational perspective Amplats’ (Anglo Platinum’s) labour productivity is up +17% vs 1Q’09 and Amplats states it is on track to maintain flat cash costs, which would result in +3% 2010 EPS upgrades at Anglo American,” said Liberum Capital in a note.

Anglo Platinum is 79% owned by Anglo American.

Anglo Platinum expects a supply deficit in the platinum market this year because of a “significant recovery’ in demand because of restocking in the autocalyst and industrial sectors against a moderate increase in supply.

“Platinum demand remained firm as vehicle production increases surpassed the encouraging increase in vehicle sales,’ it said.

“The consequent restocking of autocatalyst metal inventory levels; metal inventory increases in industrial applications; and firm investment demand drove the platinum price above Anglo Platinum’s average forecast for 2010 of $1,500 per ounce,’ it said.

Platinum prices have risen to their highest levels since August 2008, topping $1,737/oz.

Anglo Platinum warned that jewellery demand could fall this year compared to last year’s strong performance where offtake for the metal nearly matched consumption by the autocatalyst market for the first time.

Johnson Matthey reported in November last year demand for platinum to make jewellery leapt 80% higher, rising one million ounces to 2.45 million oz, just shy of the 2.48 million oz the autocatalysts makers wanted that year.