Expatica news

Anglo American Platinum plunges into deep loss

Strike-scarred AngloAmerican Platinum reported Monday that it lurched into huge losses revealing deep damage from a tough 2012 and warned it has to absolutely turn the company around.

In its 2012 financial statement, Amplats reported net and operating losses in the face of cuts in output, jobs, cash flow and investment. It also incurred a huge rise in debt.

The world’s top global platinum producer Amplats posted a 1.468 billion rand ($165 million, 122 million euros) net loss down from a 3.566 billion rand profit in 2011, a plunge largely blamed on deadly wildcat strikes that hit South Africa’s mining sector.

Net revenue plunged 16 percent to 42.8 billion rand ($4.8 billion; 3.6 billion euros), while net debt shot up by 186 percent. The company waived its dividend.

The company reported an operating loss of 6.334 billion rand for 2012 from a profit of 7.965 billion rand in 2011.

In a bid to swing back to profitability, the company plans to cut 14,000 jobs and shut two of its shafts in the platinum belt of Rustenburg, northwest of Johannesburg.

“We need to do something about the profitability of the company,” chief executive officer Chris Griffith said in a conference call. “We have got to turn around this company.”

Amplats reported an eight-percent fall in its output of refined platinum to 2.22 million ounces, mainly because of the two months of industrial action in the last half of the year.

Chief financial officer Bongani Nqwababa said there is still “significant headroom to manoeuvre.” as the company took a knock from low mineral prices and the strike-related fall in output.

Tens of thousands of Amplats workers went on strike last year during a wave of deadly work stoppages that hit South Africa’s mining sector.

Around 50 people died in the industrial actions that started at Lonmin Platinum’s Marikana mine where police shot dead 34 miners in a crackdown that shocked the world with its resemblance to apartheid brutality.

In response to the rolling losses, Amplats firm has decided to cut its investment programme drastically.

“We have reduced our capital expenditure target for 2013 to 2015 by approximately 11 billion rand and for the next decade by 25 percent, to 100 billion rand,” said Amplats in a statement.

The company announced on January 15 that it would layoff 14,000 workers in a restructuring, but has stalled the process pending talks following an outcry from unions and the government.

Griffith said on Monday that “30 percent of those jobs are likely to be redeployed within the company.”

The ruling African National Congress (ANC) party, which has rejected calls for nationalisation of mines, wants struggling operators to instead cede their exploitation rights to other companies instead of shutting down mines.

Meantime resource-hungry China is venturing into the sector where others are struggling.

The China Development Bank last month approved a $650 million loan for the development of Bakubung Platinum mine owned by Wesizwe and Chinese consortium Jinchuan Investments. The mine is located in the same platinum region as Anglo American and several others.