Johannesburg, South Africa — 24 July 20123 – Anglo American Platinum, the world’s top producer of the precious metal, has warned that it could not afford "unrealistic" wage rises, as it continues with battle loss-making mines and climbing costs.
Amplats, as the unit of miner Anglo American Corporation is known, almost doubled its headline profit but that was largely due to a weakening in the rand. The group continued to burn cash in the first six months of 2013, reports Fin24.
The platinum miner suspended dividend payments.
Amplats’ Rustenburg mine northwest of Johannesburg, which has seen violent wage protests, bled R1billionn in the six-months to end-June and the company’s chief executive, Chris Griffith, said Amplats could not meet union wage hopes.
“The rand bailed us out, if that had not been the case we would have been in a lot more trouble,” Griffith said on a conference call. “There is not a chance that we can give in to unrealistic wage demands.” He added the demands could spark further job cuts.
Amplats, battling to return to sustainable profits, plans to lay off up to 6,000 workers and close three shafts to scale back production. But it is also battling with unions asking
“While the headline earnings look like there is an improvement, it is a low-quality number,” said Justin Froneman, platinum analyst at SBG Securities in Johannesburg.
“What worries us is the estimated R2.6 billion restructuring costs that are likely to come through in the second half."
While refined platinum production was flat year-on-year at 1.2 million ounces, the company has negative net-cash flow and its net debt is inching higher.
But Amplats is not alone. In the face of unrelenting cost escalation, platinum producers have been forced to shift priorities and sector-wide asset reviews have seen older shafts shut and growth projects shelved.
Source: Bloomberg News. For more information, click here.