Amplats unbundling will create “opportunities” for rivals

THARISA, a chrome and platinum miner, welcomed the proposed unbundling of Anglo American Platinum (Amplats) as it would create “synergies and opportunities”.

Amplats would be unbundled in terms of the first stage of BHP’s proposed takeover of Anglo American. In rejecting BHP’s takeover, Anglo American has also proposed the unbundling of its 79% owned Johannesburg-listed subsidiary.

“As an entire business it would be too big for us to consider, but there are synergies and opportunities at some of their [Amplats] operations,” said Phoevos Pouroulis, CEO of Tharisa in an interview on Thursday.

“It could be as simple as collaboration or something beyond that. At this stage we haven’t formulated a strategy until we know what it (Amplats) looks like.”

Nedbank Securities analyst Arnold van Graan said the “shake-up” of Anglo was positive for Amplats “in the long run” as the platinum miner have more autonomy over its strategy and capital spending. “Essentially, this would enable it to invest more in the business and send less cash (dividends) up to the centre,” he said.

Analysts at Platinum Week in London backed the rationalisation of South Africa’s platinum group metals (PGM) sector that the unbundling of Amplats would potentially bring.

“The industry is quite resilient to shocks. There were already discussions about how a changing South African PGM mining sector can bring more agility and collaboration,” a UK based analyst said.

Said Pouroulis: “Certain assets need a re-think and restructuring. A fit-for-purpose, streamlined operation would be positive for the industry. That was general view net positive for PGMs and the industry at Platinum Week,” he said.

Amplats’ Amandelbult mine has been a long-standing problem for Amplats. The mine, located on the most northerly tip of the western Bushveld, was one of the group’s most targeted in terms of a cost cutting announcement in February potentially affecting 3,700 fixed term employees and 620 contracting companies. It had already announced plans to save R10bn in annual costs of which R5bn were in operating costs.

Northam Platinum wouldn’t rule out bidding for Amandelbult. “There are assets in other people‚Äôs hands” that interested the company “as this is a heavily concentrated industry,” said Northam CEO Paul Dunne in August.

Amplats reported a 71% year-on-year fall in headline share earnings for the 12 months ended December to R53.30/share.