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Strike, falling prices squeeze Amplats operating profit

Published on 09/02/2015

The world's biggest platinum producer Anglo American Platinum said Monday a lengthy strike at its South African mines squeezed operating profits last year, but it managed to achieve a net profit thanks to fewer writedowns.

Announcing the firm’s financial results for 2014, chief executive Chris Griffiths said that while the strike had a “significant impact” the company had navigated through this difficult period.

Net profit was 624 million rand ($54 million), after a loss of 1.37 billion last year when the company write down 2.8 billion rands in value on property and equipment.

Operating profit slid 57 percent to 843 million rand from 1.97 billion rand in 2013 as the price of platinum fell.

The company said that the “platinum price remained flat during the first half of 2014 .and declined in the second half of the year, largely on the back of macro-economic factors impacting currencies and precious metal commodity prices.”

The average platinum market price dropped by 6.9 percent to $1,385 per ounce, but for Amplats’ accounts this was more than offset by the South African rand weakening by 10 percent year-on-year against the dollar in 2014.

Amplats said it has completed its restructuring process, with the consolidation of its Rustenburg operations, north west of Johannesburg, from five mines into three, and Union Mines down from two into a single operation.

Griffiths said the company will continue its cost reduction programmes to improve efficiency.

“Our focus remains on the restructuring and repositioning of our portfolio,” said Griffiths.

With the Johannesburg-listed firm’s net debt soaring to 14.6 billion rand from 3.2 billion rand the board did not declare a dividend for 2014.

The company said in a statement access to capital remained a strategic risk to the mining industry.

Amplats also owns Unki Platinum Mine in Zimbabwe, which was not affected by the five-months long strike.