The CEO of world number-one platinum miner Anglo Platinum (AngloPlat), Ralph Havenstein, on Tuesday warned that the strength of the rand, at about R6 to the dollar, is threatening AngloPlat’s expansion plans and jobs.
AngloPlat is currently in the process of expanding its platinum output in an attempt to meet the strong global demand for the metal, especially for use in auto catalysts and in the manufacture of jewellery.
The global platinum market is currently into its sixth consecutive year of deficit. AngloPlat expects that deficit to persist, while rival Impala Platinum sees the market coming into balance in 2004.
Earlier on Tuesday, AngloPlat reported a 32% increase in headline earnings per share to 685 cents from 519 cents in the previous comparative period. The key to reasons for the increase were a higher rand platinum group metals basket price for the half-year and higher refined platinum output.
“The interim result was more or less in line. AngloPlat’s cost control was relatively good, but the proof of the pudding will be in the group’s second half. The strong rand remains a concern,” said UBS platinum analyst Willem Venter.
AngloPlat is currently aiming to increase its refined metal output to 2,9-million troy ounces from 2,3-million in 2003. A further cut back in platinum output could see a potential price spike, which could damage platinum demand. This potential is a concern to AngloPlat, Havenstein said.
Havenstein joined AngloPlat as CEO in June 2003 from oil and chemicals group Sasol, where he was an executive.
Some market commentators have predicted that platinum could go through a boom and then a bust, like palladium and rhodium, if South Africa’s platinum miners don’t adequately supply the global market with primary metal.
More than 70% of the world’s supply for primary platinum metal comes from South Africa.
“In line with the strong rand, we are committed to a review of our projects on an ongoing basis. No date has been set for the review,” Havenstein said.
AngloPlat is in the process of implementing some of the recommendations on its cost structure by consultants Bain and Co with the group currently in talks with staff associations and unions.
AngloPlat is set to announce the results of the restructuring in mid-August.
The group is expected to make job cuts, especially at its head office, which employs about 370 people.
As part of the restructuring, AngloPlat’s chief operations officer, Dorian Emmett, is leaving the group and will join Anglo American, which owns about 74,8% of AngloPlat, as its sustainable development officer based in London.
AngloPlat has also changed its management structure so that Havenstein directly oversees all processing and mining activity.
The group is also looking to reduce increases in the unit costs of refined platinum to CPIX, inflation less mortgage costs. In the 2003 financial year, AngloPlat units cost of refined platinum increased by 19,6%.
South Africa’s CPIX increase in April was 4,4% while economists expect June CPIX to be 5,5%.
“It is a tough target [an increase of CPIX]. We also need to find an outcome to the current wage negotiations. We have a fighting chance to reach that target,” Havenstein said.
AngloPlat is currently offering its workers a wage increase of 4,7%, while the National Union of Mineworkers (NUM) is demanding an increase of 15%. NUM is said to represent about two-thirds of AngloPlat’s work force of 34 000.
At 4pm on Tuesday, AngloPlat’s share on the JSE Securities Exchange was quoted unchanged from Monday’s close at R232. — I-Net Bridge