Amplats to pay special cash interim dividend despite pressure on palladium price

Natascha Viljoen, CEO, Amplats

ANGLO American Platinum (Amplats) kept the good vibes flowing following its record cash payout last year with a R40 per share special cash dividend for the six months ended June 30 taking the payout for the period to R81/share or R21.5bn.

This represents an 80% payout of cash and compares to a R175/share interim payout last year (100% of cash) which came amid sky-rocketing platinum group metal (PGMs) prices and as Amplats sold metal out of inventories following an earlier processing lock up.

Amplats has a 40% of headline earnings payout ratio. Net cash was R41.8bn as of June 30, a decline of 27% compared to December 31.

For the period under review, PGM prices in rand terms remained high: they fell only 1% year-on-year to average R41,132 per ounce sold. In dollar terms, the basket price was 7% lower, averaging $2,671/oz for the six months.

Normalised production (post the inventory unwind) and the effects of inflation resulted in headline earnings falling 42% to R26.7bn. Headline earnings per share were 101.4 cents compared to 176.47/share in the previous interim period, a decline of 43%.

“The first half of 2022 has seen us largely mitigate the operational headwinds of Covid-19, global supply chain disruptions, managing electricity disruptions, as well as social and geopolitical complexities to deliver another strong financial performance,” said Natascha Viljoen, CEO of Amplats.

Commenting on the PGM markets, Viljoen said platinum would gradually move into a deficit owing to “… a significant increase in automotive platinumd demand” and as platinum replaces palladium in gasoline catalysts. Palladium was likely to move into a surplus for the opposite reason, although the extent of this would depend on automotive production, said Viljoen.

Rhodium would “head back into deficit after two years of surplus,” she added.

Matte and concentrate production for the first half of the year totalled 1.99 million ounces while refined came in at 1.96 million oz. Sales totalled were just over two million oz, well down on the 2.57 million oz sold last year at the interim stage – a function of the inventory that Amplats was clearing.

Amplats has guided to full year metal in concentrate production of between 3.9 to 4.3 million ounces and refined production of four to 4.4 million oz. Unit cost guidance of between R14,000 to R15,000/oz assuming an oil price of $100 per barrel.

This is despite putting the Polokwane smelter into a full rebuild whilst also undertaking maintenance at the south smelter at Mogalakwena.

Craig Miller, CFO of Amplats, said mining input inflation totalled 10.2% for the six month period including heft increases in oil, chemicals and explosives. However, cost increases were contained at about 8%.

“Anglo American Platinum is confident that full-year guidance will be achieved; however, potential external headwinds exist, including further Covid- 19-related disruptions and Eskom load-shedding,” said Viljoen.