Amplats to post off the charts interim earnings as PGMs sell for 29% higher price

ANGLO American Platinum (Amplats) will report off the charts interim headline earnings telling shareholders in a trading statement today that the rand basket price for its metals was 29% higher year on year.

Headline earnings are likely to be between R45.5bn and R46.8bn which compares to interim headline earnings last year of R6.9bn. Headline share earnings will be between 17,300 cents and 17,795 cents per share compared to 2,627 cents last year.

The numbers were heavily assisted by improved production given that the company’s refined output was constrained by a shutdown of its processing units in the previous half-year period. Covid-19 related disruptions also affected metal-in-concentrate production.

Interim headline earnings in the firm’s 2019 financial year were R7.4bn which was a 120% year-on-year increase.

Second quarter platinum group metals (PGM) production totalled 1,058 million ounces – about 59% higher than in the second quarter of 2020 when it produced 665,000 oz. The improvement was down to a reduction of Covid-19 disruptions – with an improvement in output at Mogalakwena, Amplats’ mechanised mine, and the return to operation of its Anglo Converter Plant A (ACP Phase A) unit in November 2020.

The company has lowered the upper end of its previous metal in concentrate production guidance to reflect new guidance of 4.2 to 4.4 million oz compared to 4.2 to 4.6 million oz previously. Refined production for the year is guided to 4.8 to five million oz compared to a previous estimate of 4.6 to five million oz.

These production forecasts were “… subject to the impact of Eskom load-shedding. Both are subject to the extent of further Covid-19 related disruption,” the company said.

Basic interim earnings are likely to be between R45.5bn and R46.8 bn compared to R6.7bn in the interim period of 2020. Basic interim share earnings are expected to be 17,300 cents to 17,795 cents per share compared to 2,546 cents in 2020.

The average realised basket price in the first half was $2,884 per PGM ounce and reflected “… strong prices, particularly for rhodium and the minor metals, partly offset by higher than normal sales volumes of lower priced ruthenium”.

The average platinum price of $1,170/oz was 37% higher year on year while the palladium price averaged $2,641/oz, an increase of 23%. However, it was rhodium that stood out: although a minor metal in terms of its portion of total PGM production, it averaged $24,377/oz – an increase year on year of 171%.

Anglo American

The numbers represent good news for Anglo American which owns 80% of Amplats. Commenting in the UK group’s second quarter and half-year production report, CEO Mark Cutifani said the company had maintained operating levels of 95% of capacity.

As a result, production increased a fifth compared to the second quarter of last year as De Beers, the 85% owned diamond producer and marketer, increased rough diamond production 134% to 8.2 million carats.

Commenting on the diamond market, Anglo American said that consumer demand for polished diamonds had continued to recover in the six month period. This had led to “… strong demand for rough diamonds from midstream cutting and polishing centres, despite the impact on capacity from the severe Covid-19 wave in India during April and May”.

There was also improved production at Los Bronces, the group’s copper mine in Chile whilst on the whole, Anglo’s copper production increased by 2% to 169,700 tons.

Notwithstanding a decline in production from Anglo’s Brazil mine Minas Rio, total group iron ore production increased 6% to 15.7 million tons (Mt).

Production at Minas Rio decreased by 5% to 5.9Mt owing to “… further unplanned maintenance at the beneficiation plant” that is now complete. The majority of the volumes were expected to be recovered during the remainder of the year, said Anglo.