Anglo American Platinum announces 2023 results and restructuring

According to Craig Miller, CEO of Anglo American Platinum, 2023 was a challenging year. The discipline of getting the basics right has helped it achieve a record safety performance and deliver stable production in the context of a difficult operating and macro-economic environment. Anglo American continue its work to set the business up to be sustainable for the long term, and that requires us to be disciplined, focused and decisive.

Total PGM production from own-managed mines decreased by 5%, mainly due to planned infrastructure closures at Amandelbult, poor ground conditions at Dishaba and expected lower grade at Mogalakwena. The decline was marginally offset by increased production from Unki.

The disposal of its 50% interest in Kroondal became effective on 1 November 2023, resulting in Kroondal transitioning to a 100% third-party purchase of concentrate (POC) arrangement.

Refined production was 1% lower, primarily due to lower metal-in-concentrate production and the impact of Eskom load-curtailment of c.82,000 PGM ounces. This was offset by the release of concentrate stocks. Sales volumes increased by 2% due to the draw down in refined stock.

Anglo American Platinum realised dollar basket price fell by 35% in 2023 to $1,657 per PGM ounce – the lowest level since 2019. This reduction was predominately caused by a decline in palladium and rhodium metal prices, which reduced by 37% and 58% respectively.

The decrease in price combined with higher costs which were as a result of above inflation energy costs, increased drilling activities, and higher labour and mechanical spare costs, were the main drivers of EBITDA declining by 67% to R24 billion with a mining EBITDA margin of 35%. Headline earnings for the year are R14 billion, 71% lower than the previous year. The Company ended the year in a net cash position of R15 billion, including the customer prepayment of R11 billion.

Suppressed PGM prices, coupled with significant cost pressures and an uncertain outlook, require further intervention to ensure the long-term sustainability and competitive position of Anglo American Platinum operations.

The Action Plan which was outlined in December 2023 encompasses a variety of measures, including embedding sustainable cost reduction initiatives that are expected to deliver a R5 billion annual cost saving from a 2023 baseline. Stay-in business capital will also be reduced without compromising asset integrity, whilst development capital will be re-phased still supporting value adding long-term growth optionality from Anglo American Platinum world class mineral endowment.

These measures are expected to result in cash operating unit costs of between R16,500 – R17,500 per PGM ounce for 2024, as well as a targeted all-in sustaining cost (AISC) of ~$1,050 per 3E ounce in 2024.

In addition, there is an intentional strategy at the concentrators to produce higher grade concentrate. This produces the same PGM content at lower concentrate throughput volume which has the benefit of reducing required primary furnace capacity and allows it to place the Mortimer Smelter on Care and Maintenance, thereby reducing operating costs, capital expenditure and enhancing overall processing competitiveness.

Studies are underway to convert the smelter to slag cleaning duty with an appropriate SO2 abatement solution in the medium term that would enable processing of historical converter slag tails, which could unlock further value.

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