Photo: Reuters
JOHANNESBURG – Anglo American Platinum (Amplats), the world’s biggest platinum producer, has rewarded its shareholders with a bumper R3billion in dividends - the biggest in a decade - as a platinum group metal prices (PGM) led by palladium and rhodium hit highs in the year to December 2018.

Amplats, the subsidiary of diversified mining giant Anglo American Plc, declared a final dividend of R2billion during the period to bring the total dividend for the year to R3bn.

The doubling of rhodium price coupled with the stronger palladium boosted the balance sheet, giving Amplats a leeway to change its dividend payout ratio policy to 40percent from 30percent of headline earnings.

Amplats said that its headline earnings a share soared 95percent to R28.93 per share in the year under review.

The group which operates the Mogalakwena mechanised mine in Limpopo and Unki in Zimbabwe said its balance sheet was now healthy with cash flow from operations rising by 60percent to R5.6bn.

It slashed net debt by R4.7bn to a net cash position of R2.9bn from an R1.8bn debt in 2017, placing the company at the top of the JSE All Share Index in 2018 with a total shareholder return of 55percent.

PGM production increased to 5.2million PGM ounces, a 4percent improvement on record production from Mogalakwena, Unki and Kroondal.

Production in 2019 is expected to be lower at between 4.2 and 4.5million ounces as a revised contract that will see refined metal returned to Sibanye-Stillwater.

“Anglo American Platinum delivered another strong operational and financial performance in 2018,” Amplats chief executive Chris Griffith said.

Speaking to journalists yesterday, Griffith flagged the potential headwinds as Eskom and wage negotiations.

Griffith said the group was considering a 100MW solar plant at the Mogalakwena mine.

“There is a process to get permission to build the solar plant,” Griffith said, adding that the company would likely appoint a third party to build and operate the plant.

Griffith said that last week the company lost 14000ounces of PGMs due to Eskom's five days of load shedding following the failure of seven generating units.

Griffith said the animosity between Sibanye-Stillwater and the Association of Mineworkers and Construction Union (Amcu) would likely roll over to the upcoming wage talks in the platinum belt.

“The industry in platinum is dominated by Amcu, and that means we can face tough negotiations,” he added.

Amcu was leading a three-month wage strike at Sibanye to demand R1000-a-month wage hike.

Seleho Tsatsi, an investment analyst at Anchor Capital, said the majority of Amplats’ operations were in the lowest-cost of the cost curve, “making it the lowest-cost major SA PGM miner with the best balance sheet (R2.9bn net cash) and the only firm among its peers to pay a dividend.”

Cost guidance for this year is expected to be between the range of R21000 and R22000 per produced platinum ounce.

Amplats shares rose 1.32percent on the JSE yesterday to close at R700.