ANGLO American Platinum (Amplats) will “critically evalute” projects that might have been previously overlooked once it had been demerged from parent group Anglo American.
Anglo American announced a restructuring on May 14 in which it would demerge Amplats and sell De Beers and its metallurgical coal mines in Australia. Duncan Wanblad, Anglo CEO said the process could take 18 to 24 months to complete.
Commenting on the demerger, Craig Miller, CEO of Amplats said: “It will create opportunity for us to critically evaluate some of the projects and how they compete for capital internally in the business instead of across the group in Anglo”.
Miller said the work to demerge Anglo’s 79.2% stake in Amplats started now. “Every adviser under the sun has sent me an email but we will start that engagement process now,” said Miller. “We are very much in listening mode.
Analysts say a standalone Amplats could help give fresh impetus to South Africa’s platinum group metal (PGM) industry. The sector is currently under huge pressure owing to metal price declines which have forced it to cut production, jobs, and projects.
The sale of non-performing assets and cross border collaboration are two of the possible outcomes Amplats could consider, analysts said. But Miller said a “change in ownership” did not necessarily mean the company would look to change things too quickly.
“I still believe that we have great portfolio of assets and have the optionality to grow where necessary when the time is right and extract most value for shareholders,” he said.
“From a capital allocation perspective we won’t be competing for capital against some of the copper projects or others in the Anglo portfolio today, but at same time we will have our own balance sheet … and still need to maintain capital discipline,” Miller said.
“Wanblad suggested Amplats could take a listing in London which might help minimise the potential effects of an overhang created by the selldown by investors unable to hold shares in a pure play company, or 100% in South Africa.
Miller said he was still to have these discussions with Anglo. “A lot of those decisions will be taken in build up to the demerger and separation from Anglo. “The listing around Johannesburg is very clear and that doesn’t change. And what secondary listing looks like, that will be discussed.
“It’s still early days in terms of how Anglo sees the process unfolding. We are just getting an idea of what it looks like so it is planned and structured,” Miller said. “I take comfort from the fact Anglo did the demerger well with Thungela [Resources] which was successful demerger and listing for them,” said Miller.
Completed in 2021, shares in Thungela more than doubled in its first year of listing helped by much higher coal prices amid Russia’s invasion of Ukraine.
Miller acknowledged the PGM market is not in the same place as thermal coal was when Thungela listed, but he said Amplats’ R10bn cost out and capital reduction programme, announced in December, would position the company even if PGM prices were unchanged from today’s levels.
