ANGLO American Platinum (Amplats) today announced an R80bn total dividend for its 2021 financial year – a payout sweetened by a R33bn special cash dividend for the second half.
The special cash dividend consists of R49 per share base dividend in line with the firm’s 40% of headline earnings payout ratio and a further R76 per share special dividend equal to R33bn. The special dividend took the payout to 100% of second half headline earnings.
The payout – a new record – was a demonstration of confidence in the future of platinum group metal (PGM) prices which CEO Natascha Viljoen said in the firm’s 2021 results presentation would benefit from renewed deficits over the next two to three years.
This would underpin Amplats’ abilty to generate significant cash notwithstanding evidence of unit cost inflation, up 9% year-on-year to R12,831 per PGM ounce in 2021. As of December 31, Amplats had net cash of R49.1bn compared to R18.7bn in 2020.
Amplats reported a 22% improvement in the rand basket price for its PGMs to R44,511 per PGM ounce. The year-on-year increase in pricing was driven by rhodium which in dollars averaged $20,109/oz – some 79% higher year-on-year. There were increases in the average price of platinum which was 23% higher and palladium – 9% higher – and averaging a record $2,388/oz for the year.
As previously reported by Amplats, refined production reached a record 5.1 million oz as the company cleared out the majority of inventory build related to the Anglo Converter Plant processing interruptions of 2020 and 2021.
The record production and pricing resulted in the record headline earnings – 160% higher year-on-year to R79bn, equal to 300.42 South African cents per share. Headline earnings in 2020 were R30bn or 115.54 cents/share.
The bumper dividend was a function of “… our strong balance sheet, a healthy market outlook and confidence in the underlying cash generation of the business,” said Viljoen.
Craig Miller, CFO of Amplats, acknowledged the possibility of short-term price volatility in palladium owing geopolitical tensions. The US, the European Union, and the UK have threatened sanctions on Russia – which controls about 40% of the palladium supply – if it presses ahead with plans to invade neighbouring Ukraine.
“We are watching events unfold in Europe and there could be an impact,” said Craig Miller, CFO of Amplats. He said half of Russia’s palladium sales were to the US (24% of total) and the UK, Japan and Germany (15-20%). Customer buying had revived this year in line with the improvement in supply chain logistics, he added.
Commenting on forecasts for PGMs, Miller said a surplus in platinum would begin to narrow this year whilst rhodium would be in balance before returning to a deficit next year. Palladium would remain in deficit this year.
For the current financial year, Amplats had guided to metal-in-concentrate production of 4.1 million to 4.5 million oz. The guidance is influenced by planned maintenance at the Mogalakwena South concentrator which has been aligned to the scheduled rebuild of the Polokwane smelter. There would be a slight metal-in-concentrate build of about 100,000 oz.
Refined production is expected to be between 4.2 and 4.6 million oz. Unit cost guidance has been given as R13,800 to R14,500 per PGM oz, the equivalent of $900 per PGM oz.
