Johannesburg - Chris Griffith, the chief executive of Anglo American Platinum (Amplats), believed there was little appetite for industrial action as wage talks, which began earlier this month, entered a critical phase.
Griffith told mining analysts and journalists during a presentation of the company’s interim results yesterday that the platinum sector had suffered huge job losses and a strike was therefore unlikely.
“We have previously said we do not think there is a huge appetite for industrial unrest. The five-month strike is still fresh in people’s minds,” he said.
The Association of Mineworkers and Construction Union has demanded a 47 percent rise in salaries to R12 500 a month for entry level mineworkers.
“We think there is a greater understanding of the environment that prevails, and there will be a responsible attitude taken by all parties including unions,” said Griffith.
South Africa’s mining industry is struggling to survive with about 30 000 mineworkers facing retrenchment.
Amplats, the world’s largest platinum producer posted a 58 percent decline in headline earnings in the half-year to June despite an improved operational performance in the period under review.
Headline earnings declined to R1.04 billion at the end of June from R2.47bn in the same period last year owing to weaker prices and lower gains from inventory levels compared to last year.
The average platinum-group metals basket price sold dropped 24 percent to $1 632 (R24 400) an ounce from $1 905 a year earlier.
Despite the lower basket price, the Anglo American subsidiary generated free cash flow from operations of R3.2bn it also cut net debt to R9.9bn at the end of June, from R12.8bn at the end of December and the the board decided not to pay a dividend.
Mining inflation
The company also reigned in costs and maintained its estimates that cash unit costs would be between R19 250 and R19 750 per platinum ounce, which was equal to a 0 percent to 2.5 percent increase this year, significantly below mining inflation.
“Debt levels are still higher, we have got to generate cash and cut debt,” said Griffith.
Refined platinum production decreased by 9 percent owing to a section-54 safety stoppage at the precious metal refinery (PMR) in the first quarter, which stopped production for 12 days and impacted production build-up for a further 37 days. The PMR had since recovered to steady state and made up most of the shortfall in production.
Refined platinum sales volumes increased by 5 percent despite the reduction in refined production in the period.
Amplats has been repositioning portfolio following a review in 2013 that will see at least 70 percent of output from mechanised production.
Griffith told journalists in a conference call earlier that there were 15 000 mineworkers who had lost their jobs since repositioning of the portfolio.
Amplats was selling its Rustenburg operation to Sibanye Gold and it was awaiting Department of Mineral Resources’ approval for the deal to be finalised.
Amplats would exit its other loss-making operations including Union, Bokoni, Pandora and Kroondal operations.
No new investments would be made until next year.
Amplats shares dropped 0.43 percent on the JSE yesterday to close at R387.52.
BUSINESS REPORT