• Inside Labour

    The 'casualisation' of the workforce is often a ploy to cut costs, says Terry Bell.

  • When drones go dancing

    Drone technology's future is about to come to life in Cape Town, says Arthur Goldstuck.

  • Testing times for Matona

    New Eskom CEO Tshediso Matona has his work out cut out for him, says Mzwandile Jacks.

Data provided by iNet BFA
Loading...
See More

Amplats warning as Anglo review looms

Jan 14 2013 14:09 Reuters


Related Articles

Help Anglo decide

Amplats: Production still lost

Carroll: Every single life lost killed me

Strikes to hit Amplats full-year profit

Pain ahead as Anglo prepares SA plan

Cutifani needs free hand at Anglo

 

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.   

Tough conditions 

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 business. 

Monday's trading update highlights just how tough things have become. 

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.


Follow Fin24 on Twitter, Facebook, Google+ and Pinterest.

anglo american  |  anglo platinum  |  mining
NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
3 comments
Add your comment
Comment 0 characters remaining
 

Company Snapshot

We're talking about:

Small Business

Expanding your business requires capital and banks have stringent lending criteria in place.
 

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...
Loading...