A pit head is seen at the Tumela Mine, an Anglo American Platinum open pit mine located in the north-western part of South Africa in Thabazimbi, Limpopo. Photo: Reuters
The demerger of Anglo American Platinum (Amplats), which expects to report a plunge in earnings for 2024 full year, from parent company Anglo American is expected to be completed by June this year.
Analysts say Amplats is well structured from a technical, financial and administrative perspective “to run the company independently of Anglo American”. It, however, just needs to sort out a range of shared services that were coordinated at a group level.
The company said on Thursday that it expects headline earnings per share plunge from 5 330 cents in 2023 to between 2 889 cents per share and 3 421 cents per share in the year to end December 2024.
“The decrease in earnings compared to 2023 is primarily due to a 13% decline in realised ZAR PGM prices. Most notably, palladium and rhodium realised US dollar prices decreased 24% and 30%, respectively,” the company said in a trading update.
Shares in Amplats sank by 2.41% by 3.30pm on the JSE on Thursday to R669.23. This was in contrast to its 20.6% and 19.26% ascend in the past seven and 30 days, respectively.
Market analyst Martin Rodgers said investors in the company appeared to have expected the plunge in its earnings.
Duncan Wanblad, the CEO of Anglo American, said on Thursday that the company’s bookbuild offering of Amplats shares last year and an earlier placing had generated $0.9bn (R17bn) for the company.
“This has increased the free float of AAP by more than 50%, helping to mitigate flowback when we demerge the business, expected by the middle of 2025,” he said.
Amplats’ own mines’ refined platinum group metals (PGM) production decreased by 14% in 2024 to 1 027 900 ounces “as the build-up in work-in-progress inventory from prior years” had been released.
“A return to normal stock levels has been driven by stable and consistent performance from our processing assets, in addition to no Eskom load curtailment in the year,” said Amplats.
Craig Miller, the CEO of Amplats, said the company’s own refined production guidance had increased “largely due to the improvements in our operating performance and the stability of our processing” business.
Total PGM production for the quarter to December nonetheless decreased by 6% against the prior year period to 875 700 ounces. This has been attributed to the Kroondal operation transitioning to a 4E toll arrangement.
Mogalakwena’s quarterly production increased by 7% to 283 500 ounces, reflecting stable performance and efficiency improvements across mining activities and concentrators.
Amandelbult PGM production however declined by 9% to 136 900 ounces as a result of lower mining volumes, mainly from Dishaba, due to the company’s “decision to halt all production” following a fatality incident on 8 October 2024. Production from Mototolo firmed up by 12% to 74 200 ounces after Amplats implemented a new seven-day mining shift cycle which helped to mitigate the impact of difficult ground conditions as the Lebowa shaft reaches its end of life.
Amplats Unki mine in Zimbabwe saw production sag by 2% to 60 300 ounces as the December quarter was impacted by a three-day national power outage while production from Modikwa, which is 50% own-mined productioni, decreased by 8% to 33 400 ounces due to lower mining volumes occasioned by safety stoppages following a fatal incident on 29 November 2024.
PGM sales volumes for Amplats decreased by 14% to about 1 million tons, “in line with lower refined production” for the December quarter. In the full year, Amplats’ PGM sales volumes slowed down by 4% to 3.9 million ounces.
Average realised PGM basket prices for the December quarter were 8% higher than the same quarter in 2023 at $1 509 per ounce. However, over the full year, the company’s average realised basket price of $1 468 per ounce was 11% lower compared to average prices obtained in 2023, “mainly due to a 30% lower rhodium realised price and 24% lower palladium” realised price.
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