4 February 2013

South Africa: Amplats Reports R6.3bn Loss

The battle for union control at the Amplats mine in Rustenburg is heating up. Thirteen people were injured yesterday when the Association of ... ( Resource: Battle for Union Control at Amplats

Johannesburg — Strike hit Anglo American Platinum (Amplats) reported an operating loss of R6.3 billion on Monday.

"Operationally, 2012 was a challenging year for Anglo American Platinum and the platinum industry as a whole," CEO Chris Griffith said in a statement.

The results represent a 180 percent reduction, from a profit of R7.9bn in 2011, for the year ended December 31, 2012.

Headline earnings per ordinary share decreased year-on-year to a loss of R5.62 in 2012, from a profit of R13.65 in 2011.

"This was primarily due to lower sales volumes, the impact of higher mining inflation on costs and lower realised metal prices."

The company the illegal strikes last year, inflation, and market conditions in Europe.

Headline earnings per ordinary share exclude a loss of R463 million resulting from the revaluation of certain investments, as well as the write-down of various other projects and assets, considered uneconomical in the current environment, to the value of R6.6bn (after-tax R4.8bn).

Platinum sales volumes for the period were lower, primarily due to the two-month long illegal strike during the second half of 2012.

Anglo American Platinum, together with its share of joint venture and associate production, lost 305,600 ounces of equivalent refined platinum production.

The company reported an eight percent decrease in equivalent refined platinum production year-on-year, to 2.22mn ounces, mainly due to the illegal strikes.

In line with the decline in operating profit, operating free cash-flow decreased by R10.13bn compared with 2011, to a net out-flow of R717mn.

Net debt increased 186 percent to R10.49bn from R3.66bn at the end of December 2011.

As a result, gearing increased from 11 percent in 2011 to 25 percent at the end of December 2012.

Owing to this increase in net debt, the future funding requirements and uncertain global economy, the board resolved not to declare a final dividend.

Seven people died in accidents at the company in the reporting period.

Griffith said: "If South African platinum production returned to pre-strike levels, then the market would be oversupplied. Overall, gross platinum demand is expected to grow marginally in 2013, despite the lack of economic growth in the European market."

Amplats announced the recommendations of its portfolio review on January 15. The key recommendation was to reduce the company's production target to between 2.1mn and 2.3mn ounces per annum to more closely align output with expected demand, while retaining the flexibility to meet potential demand upside.

This would be achieved through placing the Khuseleka and Khomanani mines (four shafts) on long-term care and maintenance, and by consolidating Rustenburg into three operating mines.

There was an outcry earlier this year when it became clear that up to 14,000 jobs could be lost.

Production at Rustenburg mines would reduce to a sustainable level of 320,000 to 350,000 ounces per year.

"While we plan to keep our production profile flat, we would replace production from high-cost assets with production from low-cost, high-quality assets over the next decade," Griffith said.

The proposed portfolio review recommendations required consultation with the government, organised labour and others, prior to implementation.

On January 28 the company, along with the mineral resources department and trade unions, decided to postpone retrenchment process under the Labour Relations Act, which had started earlier that month. This was to allow talks to take place.

The parties agreed the consultations would take no more than 60 days starting on January 30.

Copyright © 2013 South African Press Association. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.