Ka-ching! Amplats to return R80bn to shareholders after posting record earnings

Anglo American Platinum (Amplats) just can’t seem to do anything wrong at the moment, and it seems everyone is a winner – the company’s employees, shareholders, communities and National Treasury. 

The platinum group metals (PGMs) producer and Anglo American unit has become a cash-spinner of note, a stark contrast from a few years ago when it was barely staying afloat in the face of depressed prices, and spasms of violent labour and community unrest. 

The bottom line is that headline earnings roared 160% higher to almost R80-billion – and that is all going back to shareholders. Both the earnings and the dividend are records. 

The key drivers here were old-fashioned ones for a mining house – increased production and higher prices – but Amplats has refashioned itself over the years with a pivot to mechanisation to be in a position for such trends to flow straight to its bottom line.

Refined production rose 89% to a record 5.1 million ounces as the company got through inventory that had been rendered dormant because of processing challenges at the Anglo Converter Plant.

“This has been an extraordinary year due to the pipeline that we’ve emptied,” CEO Natascha Viljoen told Business Maverick. 

Meanwhile, the rand basket price for the company’s products was 22% higher at R44,511 per PGM ounce. 

Shareholders are clearly the big winners here, with R80-billion in cash gushing their way – a total dividend for the year of R300 per share. 

But they are not alone. Amplats paid almost R35-billion in taxes and royalties in South Africa and Zimbabwe, over three times what it paid the previous year. 

The mining sector has been credited with providing Treasury with much-needed revenue as it grapples to contain rising debt levels while addressing South Africa’s growing social challenges. 

Amplats’ employees have also fared well, it seems, not least in terms of job security – a company that is making money hand over fist is unlikely to embark on lay-offs. The company paid R14-billion in wages and salaries last year. 

Employees are also operating in a far safer environment than a decade ago, when seven workers died on the job in 2012. In 2021, no Amplats worker was killed on the job at the operations the company manages itself. 

Amplats also spent R28-billion in local BEE procurement last year, a boost to its host communities that generates jobs, incomes and opportunities with wider economic spin-offs. The company said its “total contribution to society” amounted to almost R150-billion – hardly small change. 

Looking ahead, Amplats sees PGM demand rising on pent-up automotive demand, which has been constrained by supply bottlenecks. 

“We expect market balances for platinum, palladium and rhodium (3E PGMs) to tighten in 2022. Demand will likely improve as automotive demand for PGMs increases on the back of a recovery in light-duty vehicle (LDV) production. Supply is set for a modest increase, primarily due to growth in autocatalyst recycling as more cars are scrapped,” the company said. 

Production in 2022 won’t reach the heights attained last year as the pipeline of unrefined material has been processed. The group’s refined production guidance for 2022 is 4.2 million to 4.6 million PGM ounces. 

Barring unexpected setbacks or a collapse in PGM prices – which seems unlikely – expect Amplats to make lots of money this year. DM/BM

 

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