Anglo American Platinum posted record annual earnings on Monday and charted a strategic course focused on modernisation and reducing its carbon footprint.
The good times keep on rolling for Anglo American Platinum (Amplats). After producing stellar results in 2020, Amplats unveiled another record financial performance on Monday, driven in large part by surging platinum group metal (PGM) prices.
Headline earnings rose by a whopping 63% to R30.3-billion, lifted by a 71% increase in the PGM basket price in rand terms over the course of 2020. The key metric of Ebitda – earnings before interest, taxes, depreciation and amortisation – was up 39% at R41.6-billion.
This enabled the company to spend more than R500-million on Covid-19 initiatives, and pay R1.6-billion in wages to employees who could not work because of lockdown restrictions or underlying health issues.
A final dividend of R9.4-billion was declared, so shareholders will also be happy. It is part of a wider turnaround in a sector that just a few years ago was bleeding cash, with most shafts losing money. Amplats would have produced even more impressive results were it not for the pandemic and issues at one of its processing plants.
Several years ago Amplats, under previous CEO Chris Griffith, embarked on a profitable pivot to mechanisation, which has boosted productivity and safety. Under newish CEO Natascha Viljoen, it remains firmly committed to this journey which will also be guided by Anglo CEO Mark Cutifani and his vision.
The company’s strategic goals now include a target of 100% modernisation and mechanisation by 2030. Amplats is already 88% there, with conventional mining still taking place only at its Amandelbult operation. It also aims to reduce its CO2 emissions by 30% by 2030, a path paved in part by huge hydrogen-powered trucks that will replace diesel dinosaurs.
“If you look at where our highest energy consumption is, it will be in trucks, it will be in mills and it will be in smelters,” Viljoen told Business Maverick. “So those are three areas that we need to address.”
The company also sees opportunities in the global decarbonisation drive. The primary use of PGMs is as catalysts to cap emissions from petrol and diesel engines, and tightening regulations are seen driving demand. Rhodium this year has already scaled record peaks above $20,000 an ounce. Rising hydrogen use is also seen driving PGM demand, and PGM applications are being explored in lithium batteries as the electric vehicle revolution moves into higher gear.
This is positive for the South African economy more generally. Much of Amplats’ shareholder base is in South Africa and its shareholders have had some great returns. Bigger profits mean more taxes at a time when the National Treasury needs every rand it can lay its hands on. Higher PGM prices also translate into higher export earnings, which in turn support the rand.
Job losses are being arrested and much of Amplats’ workforce in 2020 was paid when it could not work, alleviating Covid’s impact on household incomes. The company and its employees will be well placed if and when the pandemic’s third wave sweeps South Africa.
Amplats’ success can also lead to job creation off-site as it reaches into its deep pockets to procure goods and services. And, hopefully, the violent labour unrest of the recent past will not define the industry’s future. At the moment, that future looks bright. DM/BM