Anglo American Platinum said on Monday it was delivering on its promises as it announced a reduction in net debt from R12.9 billion to R9.9 billion while recording a hefty decline in earnings for the six months to the end of June.
The miner, whose majority is owned by Anglo American, reported headline earnings for the period of R1.04 billion, down from R2.47 billion in the corresponding period last time but pointed out that earnings before interest and tax were up by 12% to R1.5 billion, after normalising for the stock gains of R2.2 billion in the first half of 2015 and R600 million in the first half of 2016.
Sales revenues had edged forward by 3%, from R29.9 billion to R30.7 billion, but platinum group metals pricing had remained weak during the period. The average US dollar basket price per platinum ounce was down by 24% to US$1.632 from the US$2.157 achieved in 2015. The decline was partly offset by a weaker rand, resulting in the rand basket price ending 3% weaker at R25.100, compared with R25.748 in the first half of 2015.
“Within this pricing environment, the company continued to make progress in implementing its value-driven strategy and improving its operational performance,” Amplats said in a statement.
Since 2013, the company said, it had reduced unprofitable platinum production by more than 350 koz. This had been achieved through interventions, including placing Marikana on care and maintenance, consolidating Rustenburg mines from five to two mines and Union from two to one mine, as well as restructuring at Bokoni.
Continuing efforts across operations to “rightsize” the business into a smaller and less complex organisation had also included significant headcount reductions. Amplats said R400 million of the R1 billion of overhead cost savings identified through the reduction of 400 managerial roles and non-labour overhead savings had been achieved during the six months under review.
The company said cash operating costs at R17.8 billion had increased by 5% during the period, below the level of mining inflation, as a result of cost reduction initiatives and benefits. Unit costs of R19.436 a platinum ounce increased by 1.8% over R19.095 achieved in the first half of last year.
Chris Griffith, Amplats’ chief executive, said: “We are delivering on our promises and making progress on our value driven strategy. Despite the weak PGM pricing environment, operational excellence resulted in R3.2 billion of free cash flow generated across the portfolio and a net debt reduction of R2.9 billion.
“We remain focused on cash conservation and disciplined capital allocation whilst continuing to prepare for the future through market development with our strategic partners, modernising through innovation in mining and processing technology, and we are ensuring a productive and engaged workforce that lives in stable host communities.
Headline earnings a share came in at R3.99, down from R9.45. The board did not declare a dividend “owing to the net debt position of the company and considering future capital funding requirements in an uncertain macroeconomic environment”.
– African News Agency (ANA)