ANGLO American Platinum (Amplats) will post a hefty decline in earnings for the first half of its financial year despite increasing sales.
It also announced the tragic (if relatively rare event) of fatalities as its Amandelbult mine.
Basic earnings for the six months ended June would fall between 15% and 25% to R5.8bn and R6.6bn owing a 24% decline in rand-denominated prices. Palladium and rhodium prices were 34% and 49% lower respectively year-on-year.
First half sales increased 14% to 1.27 million ounces as a result of higher refined production in the period and a draw-down from inventories.
Total platinum group metal (PGM) production fell 2% after Sibanye-Stillwater last year acquired the balance of the Kroondal joint venture, but “own” production was 9% higher year-on-year, partly owing to a much improved performance at Amandelbult, Amplats’ Limpopo province mine.
Amandelbult, which is the focus of major cost-cutting, increased production 7% to 157,600 oz. Amplats said this was the fruit of “operational efficiencies”, but it came at the ultimate cost. During the period two miners were killed at the operation.
Amplats imposed stoppages at the mine amid an investigation. It forecast a 5% impact on matte and concentrate production as a result.
The stoppage is not enough to materiallly affect full year guidance, however, which has been maintained at 3.3 to 3.7 million oz in matte and concentrate production.
Amplats, which is due to present its interim numbers on July 22, announced in February a review of its operations potentially affecting 3,700 fixed term employees and 620 contracting companies. It earlier announced plans to save R10bn in annual costs of which R5bn were in operating costs.
Craig Miller, CEO of Amplats said today the restructuring was “well advanced” with further details to be announced next week.
Miller’s views on the unbundling of parent company Anglo American’s 79.2% stake in Amplats is also likely to feature at the results presentation. Analysts have remarked that a standalone Amplats, with full control over cash allocation, would be more proactive regarding business strategy.
Miller said in June the unbundling would “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”.
The unbundling, scheduled to be completed by the end of 2025, comes at a time when the PGM market is showing few signs of major improvement.
