Anglo American has started disposing of its interest in Anglo Platinum (Amplats) as part of a wider strategy to unlock shareholder value.
The London-based group this week raised R7.2bn in an accelerated bookbuild process for 13.9-million shares representing 5.3% of Amplats, the world’s biggest platinum maker. Anglo American’s remaining stake now stands at 73.3%.
Anglo American CEO Duncan Wanblad said the proceeds would go to cutting debt.
“The proceeds from the placing will also reduce our net debt as we continue to implement our portfolio transformation to focus on copper, premium iron ore and crop nutrients — and thereby drive sustainably attractive returns.”
Anglo announced the portfolio transformation in May after rejecting global mining giant BHP’ s $39bn (about R690bn) takeover bid. It plans to exit its platinum, diamond, steelmaking coal and nickel businesses by 2025.
During the group’s interim financial results presentation in July, Wanblad said the group was on track to deliver the Amplats demerger by 2025.
“Success involves getting the separation right, but also making sure we think about taking the right action to manage flowback proactively,” he said at the time. “We are therefore looking at the potential of a listing on the London Stock Exchange alongside the primary listing which will remain on the JSE. All of these processes are now under way.”
The net result is we will still ensure sufficient scale of operation to maintain our important recycling operations and to leverage off the recent Reldan acquisition
— Neal Froneman, CEO Sibanye-Stillwater
Anglo American said the intention is to implement a full demerger in 2025 — and the accelerated bookbuild is a step towards that.
Wanblad said this week the group was moving to distribute some of its Amplats shares into the hands of a wider range of investors ahead of the planned demerger.
“This is expected to increase share trading liquidity in the near term as well as mitigate the impact of flowback following the demerger as a result of fewer Amplats shares being distributed to Anglo American’s shareholders.”
For the half year ended June 2024, Anglo American, weighed down by low commodity prices, reported an 8% decline in revenue to $15.2bn with liquidity at $15.7bn.
Low platinum group metals (PGMs) prices were reflected in the R7.1bn first-half loss reported by Sibanye-Stillwater on Thursday. Revenue dropped 9% to R55.2bn for the six months ended June 2024. The group announced additional restructuring of its US PGM operations, saying production would be cut by 200,000oz to reduce costs.
Sibanye-Stillwater CEO Neal Froneman said at the results presentation the group’s US business was plagued by losses and an additional restructuring process affecting 800 employees and contractors will be implemented.
“We have initiated the last phase of restructuring. It is material and significant. We are entering a final phase where we will restructure the US business for a PGM basket price below $1,000/oz.”
He said the group’s Stillwater mine will be put on care and maintenance and production at its higher-grade Stillwater East operation, which has lower costs, would be “slightly” increased.
“We will reduce production from East Boulder,” Froneman said. “That will improve the cost performance but also defer expansion capital. Unfortunately, it does result in a further headcount reduction of 800 employees and contractors. The net result is we will still ensure sufficient scale of operation to maintain our important recycling operations and to leverage off the recent Reldan acquisition.” Sibanye acquired the Reldan Group to complement its US recycling business in the US.
The World Platinum Investment Council (WPIC) said in its Q2 2024 report this week that platinum miners had implemented restructuring efforts and capital deferment programs to ease margin pressure stemming from low prices. Based on announcements from producers, it estimated that South Africa’s PGM mining industry will cut about 10,000 jobs this year.
“This 6% headcount reduction is higher than our forecast that South African platinum production declines by 2% year-on-year in 2024".
The council said although South African miners had met production guidance so far through 2024, a shrinking workforce in conjunction with lower capital expenditure meant output could wane.
“It is worth noting that South African platinum production has declined by 1.7% compound annual growth rate since 2006, which is illustrative of the challenges facing primary platinum supply.”
The council said the platinum market deficit is forecast to be 1.02-million ounces for 2024 following a 731,000oz deficit in 2023.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.