Johannesburg - Anglo Platinum [JSE:AMS] (Amplats), the world's biggest
producer of the precious metal, said it plunged to a loss in 2012 because of
illegal strikes, days ahead of a review by its parent which could stoke
tensions by cutting jobs.
The review by Anglo American [JSE:AGL], which owns about 80%
of Amplats, is widely expected later this week to announce at least some shaft
closures in the face of soaring costs and falling profits.
However, this risks a new wave of labour unrest, with the
militant Association of Mineworkers and Construction Union (Amcu)
threatening to close operations like it did last year if the review leads to
closures and job losses.
"We remain concerned regarding the company's ability to
initiate operational changes given the current South African social and
political environment," said Justin Froneman, a platinum analyst at SBG
Securities in Johannesburg.
Amplats said on Monday it lost 306,000 ounces of output last
year - about 12%-13% of expected production - due to illegal strikes which were
part of a wave of often violent wildcat activity that killed around 50 people
and brought many of South Africa's gold and platinum mines to a standstill.
Froneman and other analysts expect Amplats to close shafts
that produce about 200,000 ounces per year, though the cuts could be deeper and
are expected to focus on struggling mines around the restive platinum belt city
of Rustenburg about 120 kms northwest of Johannesburg.
This could help lift the spot price of the white metal used
in auto catalysts to reduce pollution. Amplats accounts for about 40% of the
global supply of platinum, which has seen its price tumble since 2008, mostly
because of sluggish car demand in Europe.
With Amplats' Rustenburg operations employing close to 20
000, closure of two of the more labour-intensive mines could translate into job
cuts of up to 10 000.
The review was commissioned almost a year ago and Anglo has
three broad options: It can spin off Amplats; it can do little and hope profits
rebound; or it can close loss-making shafts to create a nimbler, profitable
Monday's trading update highlights just how tough things
Amplats said it expected to report a headline loss of 491 to
628 South African cents per share for the year ended December, compared with a
profit of 1,365 cents a year earlier.
A poll of 10 analysts by Thomson Reuters had forecast
earnings of 190 cents per share for diluted headline earnings, meaning the
market had expected the company to eke out a small profit for the full year.
Amplats' share price was down over 2% by 11:00 GMT.
In addition to lower sales, Amplats said it was also hit by
a decline in platinum prices.
The company said it would also write down the value of some
projects not considered economically viable by R6.6bn.