Anglo American Platinum has reported a robust set of financial results, underpinned by high prices for its metals.
According to Natascha Viljoen, CEO of Anglo American Platinum, the company’s operations are well-positioned for a strong recovery after facing significant headwinds in 2020 as a result of the Covid-19 pandemic.
“The pandemic has posed incredible challenges on many fronts. The mining industry has, however, played a leading role in limiting the disastrous health and economic impact of the virus. Anglo American Platinum is well equipped to manage safety and health risks supported by our robust health management systems, which enabled us to adapt quickly and restart operations. We believe that the mining industry will continue to play an essential role in safeguarding lives and livelihoods during the pandemic. This includes the role we can play to assist in the roll-out of Covid-19 vaccines through both our logistical capabilities and existing health infrastructure. Our engagements with governments and other stakeholders continue in this regard,” says Viljoen.
Operationally, total Platinum Group Metals (PGM) production (expressed as platinum, palladium, rhodium, gold, iridium and ruthenium metal in concentrate, including joint ventures and third-party purchases) declined by 14% year-on-year to 3 808 900 ounces, mainly due to the impact of Covid-19 lockdowns in South Africa and Zimbabwe. To ensure a continued focus on safety in response to the impact of Covid-19, internal stoppages were implemented. Despite these additional protocols, the company had a strong recovery in H2 2020, with own mines production up 1% against H2 2019 (normalising for the sections at Amandelbult that came to their end of life of mine).
Total refined production, excluding tolling, declined by 42% to 2,713,100 ounces, as the temporary closure of the ACP impacted refined production. The repair of the ACP Phase A unit was successfully completed by 24 November, ahead of schedule and within budget. Capital expenditure on the Phase A plant amounted to about R500-million and was partially offset by insurance proceeds of R351-million. The ACP Phase B unit is now undergoing its full rebuild that is scheduled to be completed in the second half of 2021, at an estimated capital cost of R550 to R600-million.
As a result of the ACP process interruptions, there was a build-up of work-in-progress inventory of around 1 million PGM ounces. It is expected that this build-up in inventory will be released by the end of 2022.
In line with the 14% decrease in mining production, the unit cost of production per PGM ounce increased by 15% to R11 739 (2019: R10,189). Excluding the costs associated with unproductive labour amounting to R1.6-billion, or R607 per ounce, unit costs would have been R11 132, or 9% higher than 2019.
PGM prices were strong in 2020. In US dollar terms, the average achieved basket price increased by 51% year-on-year to USD2 035 per PGM ounce (2019: USD1,347 per ounce), helped particularly by a strong rhodium price. The rand weakened against the dollar during the year, leading to the rand basket price rising by 71% to R33 320 per PGM ounce (2019: R19 534 per ounce). Net sales revenue increased by 38% to R137.8-billion (2019: R99.6 billion), mainly due to an improvement in PGM prices and higher sales from trading activities mitigating the supply disruption to customers following the temporary closure of the ACP.
The company delivered record EBITDA of R41.6-billion, an increase of 39% from 2019, an improvement in ROCE to 72%, and a net cash position of R18.7-billion.
Considering the strength of the balance sheet, the support provided to employees and communities to limit the impact of Covid-19, and the discretionary capital options available, the Board has declared a final dividend of R35.35 per share, or R9.4-billion, in line with the policy to pay out 40% of headline earnings.