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Amplats demerger on track as it plans secondary listing in London

Amplats demerger on track as it plans secondary listing in London
Georgina Crouth
By Georgina Crouth
22 Jul 2024
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The platinum metals producer took an 18% knock in earnings due to lower platinum group metals prices and restructuring costs, but as a leaner miner it’s confident about its future

Anglo American Platinum (Amplats) shares were up 2.7% on Monday during mid-day trade, after the platinum group metals (PGM) producer announced it was on track to demerge from Anglo American by 2025 and planned to expand its investor base through a secondary listing in London.

Despite taking an 18% knock to R6.5-billion in its first-half earnings to June 2024 due to lower PGM prices and restructuring costs, Amplats was feeling bullish about future demand for PGMs.   

Demand for catalytic converters, found in both internal combustion engines (ICE) and hybrid engines, is rising while global sales of electric vehicles slows down. 

Optimistic


Craig Miller, the CEO of Anglo American Platinum, told investors during a call today that they were optimistic about the demand outlook for PGMs. 

“These metals all play an important role in creating a greener world – whether in internal combustion, hybrid or hydrogen electric vehicle drivetrains.

“The automotive demand outlook for PGM containing catalytic converters is firmer as production plans and sales of pure BEV (battery electric vehicles) stall, with hybrids (which contain PGMs) gaining market share, and the largest automakers adapt their drivetrain strategies in line with consumer demand, extending their time frames for internal combustion engine production and include various forms of hybrid vehicles in their product offering. Additionally, there are a growing number of uses for our metals – from new battery technologies to emerging medical technologies.”

Opportunities ‘numerous and exciting’


He said that as a standalone company, the opportunities were both numerous and exciting. 

“The planned demerger from Anglo American will create a more focused, independent global leader in the PGM industry, with the scale and robust foundations to maximise the potential from our outstanding business, assets, and people.”

Amplats is being separated from Anglo American as part of a broader restructuring strategy aimed at fending off the Melbourne-based BHP Group’s takeover bid. 

It announced the restructuring in May, as part of a “radical” shakeup of its structure involving divesting or separating its De Beers diamond, Anglo American Platinum, and steelmaking coal operations.

Miller said the company had responded decisively to an uncertain macroeconomic and a low PGM price cycle — caused predominantly by a decline in palladium and rhodium metal prices, which were down by 34% and 49%, respectively — by restructuring the business to pursue operational excellence, increased levels of productivity, as well as ensuring cash generation. 

“This is our value over volume strategy. As we set out in February, we are taking disciplined and decisive actions to reposition the business to ensure its long-term sustainability as a leading producer of PGMs. We are improving our competitive position, while preserving growth optionality from our world-class mineral endowment, for the benefit of all our stakeholders.”

On 19 February, Amplats revealed an “action plan” to correct course, after a 71% decline in its 2023 headline earnings and a 35% drop-off in PGM prices. As part of this plan, up to 3,700 jobs would be slashed, comprising about 17% of its workforce.

Amplats was also preparing for a secondary listing in London as part of the plan, Miller said, which would help create a more focused, independent global leader in the PGM industry.

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Amplats said it was making progress in its restructuring process, aligned with Section 189A of the Labour Relations Act, noting that Amandelbult (which consists of Tumela and Dishaba, two mines located between Northam and Thabazimbi in Limpopo) was most significantly affected. Of the 3,700 positions affected at its mines, which included both permanent and temporary roles, about three-quarters of employees had already left the company by June 2024. The remainder are expected to leave by the end of the year. The Mortimer Smelter had been placed on care and maintenance (temporary closure) at the end of April 2024.

The company had saved about R4.7-billion (R2.9-billion in operating costs and R1.8-billion from stay-in-business capital savings) in the first half of the year, which Miller said demonstrated “pleasing progress” against their 2024 cost reduction target of R10-billion. 

Despite a 24% decline in the PGM basket price compared with the first half of 2023, coupled with one-time restructuring costs and inflation, Amplats achieved EBITDA of R12.3-billion (translating to headline earnings of R6.5-billion for the period). 

The board has approved an interim dividend of R9.75 per share, or R2.6-billion, representing a 40% payout of headline earnings in line with their capital allocation policy, he said. R70-million of this dividend will be distributed to employees through their Thobo ownership scheme and to community trusts.

Overall PGM production was down by 5%, owing to two deaths at Dishaba mine last month. Refined production was up by 5% increase, while an inventory drawdown contributed to a 9% rise in sales volumes. BM

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