Anglo American Platinum (Amplats) saw a 71% drop in interim earnings for the first half of the year, dropping from R26.7 billion in 2022 to R7.9 billion in 2023.
The primary contributor to this sharp drop in earnings was a 29% drop in the platinum group metals (PGM) dollar basket price, which averaged $1,885 (R33,900) per ounce sold in comparison to the previous price of $2,671. The significant drop in the basket price was primarily due to falling rhodium and palladium prices, both of which had reached multi-year lows.
The total PGM production from own-managed mines and joint operations fell by 8%, owing to a combination of factors. First, Amplats’ flagship Mogalakwena mine experienced lower grade than expected. Second, infrastructure closures in Amandelbult and poor ground conditions in Dishaba hampered production. Finally, Kroondal’s ramp-down contributed to the decline. This decrease, however, was partially offset by increased output from the Mototolo and Unki operations.
Refined output fell 13%, owing primarily to the resumption of operations at the Polokwane smelter in January following its rebuild. Production was also impacted by scheduled annual maintenance and asset integrity work at processing operations. The situation was exacerbated by the impact of Eskom load-curtailment, which resulted in the postponement of approximately 66,400 PGM ounces of production.
Despite the challenging economic and operating environment, Natascha Viljoen, CEO of Amplats, stated that the company’s interim results were in line with expectations, following the change in guidance disclosed in 2022. Viljoen expressed confidence in the company’s ability to navigate the challenges by maintaining a disciplined capital allocation framework, a strong balance sheet, and consistent shareholder returns. The company declared an R3.2 billion gross final dividend, or R12 per share, representing 40% of headline earnings, a decrease from the R41 dividend declared the previous year.
In terms of safety, the company had no fatalities in the first half of the year and a total recordable case frequency rate of 1.58 per 1 million hours worked, which was a record low. This represented a remarkable 34% year-on-year improvement and an even more impressive 85% improvement over 2012.
In terms of the future, Viljoen emphasised that, despite the challenges, the company is confident in the long-term fundamentals of its diverse suite of metals, resources, and operations. Amplats’ operations are optional and flexible, allowing them to make informed decisions and continually strengthen their long-term cost curve position.
In the midst of the interim results, Viljoen announced her intention to step down as CEO the following year. The company is expected to make an announcement about her replacement soon.
Despite the current economic challenges, Amplats’ proactive approach, commitment to safety, and faith in its strategic resources position the company for future growth and success. Amplats’ resilient business model positions it to navigate market fluctuations while maintaining a strong presence in the PGM industry.
