Amplants, the Anglo American platinum division has revised its unpopular decision to scale down operations, a move that will appease the Jacob Zuma administration. Earlier this year, the company caused uproar in the labour market when it outlined plans to create a sustainable, competitive and profitable platinum business for the long term benefit of all its stakeholders. The decision would have seen 14, 000 jobs lost, but under the revised proposals, only jobs will be lost.
However, following talks between interested parties including Department of Mineral Resources (DMR), Anglo American Platinum says it has formulated revised proposals which remain focused on improving the profitability and sustainability of its business, while taking cognisance of the local and national socio economic challenges.
The company says the review of the business was in response to its revised expectations for platinum demand growth and a number of structural challenges that have eroded profitability in recent years, including capital intensity, mine depths, lower ore grades, higher than inflation unit cost increases, jewellery demand elasticity and increasing secondary supply of platinum.
“Anglo American Platinum’s revised proposals continue to address the objective of aligning the business with its expectations of long term demand and are an extension of the steps taken to reposition the business in recent years.”
The revised proposals include revising baseline production to 2.2 – 2.4 million ounces per annum in the short to medium term; consolidating Rustenburg into three operating mines through the integration and optimisation of Khuseleka 2 and Khomanani 1 and 2 mines into the surrounding mines. Khuseleka 1 remains operational which is the principal revision to the previous proposal.
The company says this move will result in a reduction of production capacity of approximately 250,000 ounces per annum in 2013 and by an additional approximately 100,000 ounces per annum in the medium term.
Anglo American Platinum has also undertaken to reducing overhead costs and improving efficiencies while looking at exploring opportunities for further joint venture business improvement and portfolio rationalisation.
Should these revised proposals be implemented, Anglo American Platinum’s Rustenburg operations will be reconfigured as a sustainable 320,000 – 350,000 ounces per annum platinum producer in the medium term.
As originally proposed, Anglo American Platinum’s Union mines will be divested at the right time and will be reconfigured in the interim to protect near term value. The Company’s review of its overheads, support structure and costs, as well as the review of its commercial and marketing strategy will also proceed as planned. Processing operations will be aligned to the revised long term production plans. The Company remains committed to delivering R3.8 billion of annual savings by 2015 from the indirect and direct cost savings.
Anglo American Platinum expects that the revised proposals have the potential to reduce the number of mining and processing jobs affected to approximately 6000. Anglo American Platinum will comply with the Labour Relations Act (LRA) and the MPRDA obligations and these will include full consultation with unions and employee representatives which will commence in due course.
Anglo American Platinum Chief Executive Officer, Chris Griffith says the company has been working diligently to reach the shared objective of creating a competitive platinum business for the benefit of all stakeholders.
“These revised proposals reflect our commitment to South Africa and our role in addressing the socio economic challenges facing the country, while recognising that we need to take actions to return the company to profitability. We are hopeful that the revised proposals will serve as a basis for meaningful consultation with our employees and their representative structures. The revised portfolio is one that retains flexibility, reduces complexity and will position us to achieve our goal of creating a sustainable and profitable platinum business.”