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Amplats profits bleed

Feb 04 2013 09:15 Reuters

During the meeting a number of proposals were dicussed on how the effects of Amplats' restructuring plans could be mitigated. (File, AP)

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Johannesburg - Anglo Platinum [JSE:AMS] (Amplats), the world's largest producer of the precious metal, swung to a hefty full-year loss, demonstrating the depth of the crisis at its South African operations.

The platinum miner, which is 80%-owned by resources giant Anglo American [JSE:AGL], plans to lay off up to 14 000 people as it closes two mines and sells another in a last-ditch attempt to return to profitability.

The company posted a headline loss per share of 562 cents a share on Monday for the year to end-December, way off the profit of 1,365 cents reported in the previous year.

Wrestling soaring input costs and suppressed platinum prices, Amplats was pushed over the edge by a two-month illegal strike at its operations in Rustenburg.

Labour strife since September resulted in a loss of 306,000 ounces of platinum, reducing full year output by 8% to 2.2 million ounces with refined production of 2.4 million ounces 4% lower.

The company's plans to cut output by almost a fifth - or 400,000 ounces a year - helped push platinum prices higher last month but vociferous union and government objections to the accompanying mass job cuts have threatened the restructuring.

The company has since agreed to delay the required 60-day consultation process by two weeks to allow the parties to seek alternative solutions.

"The proposed portfolio review recommendations continue to require extensive consultation with government, organised labour and other stakeholders prior to implementation," said chief executive Chris Griffith, who made no mention of backtracking.

Analysts have said going back on its plans would unsettle investors more than the potential risk of further industrial strife.

Violent illegal strikes in the platinum and gold industry claimed the lives of more than 50 people last year, including 34 striking miners shot dead by police.

"Amplats can't now backtrack. They have to do something," said Justin Froneman, a platinum analyst for SBG Securities in Johannesburg.

The company has cut its production target to between 2.1 and 2.3 million ounces a year and has slashed capital expenditure by R11bn for the next decade by 25% to R100bn.

Shares in Amplats have shed 21% of their value in the past year, compared to the JSE's platinum index, which has only dropped 9.25%.  

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anglo platinum  |  mining

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