Dineo Matomela
Anglo Platinum (Angloplat) chief executive Neville Nicolau expects the platinum price to average at least $1 800 (R12 100) an ounce, from $1 791 yesterday.
Speaking yesterday during a presentation of the interim results for the six months to June, Nicolau announced that, while Angloplat had a difficult first half, refined production and headline earnings increased. Problems resulted from stoppages due to fatalities.
Angloplat delivered strong financial results with free cash flow increasing to R4.7 billion, 159 percent more than the year-ago period. Headline earnings were 26 percent higher at R3.2bn, headline earnings a share increased 20 percent year on year to R12.36, and the headline earnings margin rose by 44 percent year on year.
Nicolau said the market would remain in balance this year. “The continued recovery in the auto catalyst and industrial segments, particularly in China, is expected to be met by increases in production.”
According to a report by Johnson Matthey, a UK-based research company, production of light duty vehicles in China hit a new record of 16.5 million units last year, a 28 percent increase from 2009.
Nicolau emphasised that the average dollar price for platinum in the first six months was robust given the unexpected negative effect of the Japanese earthquake and tsunami on the market.
It has been estimated that the Japanese disaster has resulted in vehicle production losses of about 2.8 million units worldwide.
“We anticipate that the majority of these losses will be recovered by the second quarter of 2012,” Nicolau said.
Angloplat mines include Mogalakwena, where production increased by 21 percent to 146 900 platinum ounces, and Unki in Zimbabwe, which produced 22 400 ounces. Unki is expected to reach throughput of 120 000 tons milled a month in the third quarter.
Nicolau said the company was in talks with Zimbabwe’s government as part of the indigenisation policy.
“We think we are in a positive position, and there will be a positive outcome.”
Harare is demanding that foreign companies hand over a 51 percent stake to locals.
Nicolau said platinum jewellery demand benefited from favourable market conditions, noting that Chinese jewellery sales increased 20 percent in the first half of this year compared with the same period last year. The Indian jewellery development programme was also continuing to grow.
Pieter Louw, the executive head of mines, said there had been eight fatalities this year. Accidents resulted in 33 stoppages, up from 17 last year. “There have been 12.5 days of stoppages and a total of 67 000 ounces of production was lost.”
In May Angloplat had to bail out its Bokomi mine joint venture partner, Anooraq Resources, to help it with a debt of about C$688 million (R4.88bn).
Nicolau said Angloplat was working to ensure its joint venture with Anooraq would be a success. “Anooraq is one example of an asset with difficulties in production and that is why we took over its debt.”
Angloplat shares fell 0.17 percent to close at R600.