Anglo American Platinum (Amplats) says it expects another spectacular set of results for the year to December 2021, with headline earnings likely to increase by between 146% and 166%.
In a Sens statement released on Friday, the company said the expected increase in headline earnings was primarily driven by a 22% increase in the rand basket price of platinum group metals (PGMs) and an 82% increase in PGM sales volumes.
Much of this increase in volumes arose from the sale of inventory built up when Amplats declared force majeure after a converter unit was damaged and shut down in 2020.
The improvement in sales volumes was offset in part by the higher costs of concentrate purchases, higher taxation and royalties stemming from growth in sales, as well as higher mining and processing costs stemming from higher input inflation and increased production.
Amplats accounts for about a quarter of global palladium supply, mainly used in the production of petrol-driven cars, and a whopping 42% of global platinum and rhodium supply.
The company says it expects headline earnings to be between R74.8 billion and R80.8 billion (2020: R30.3 billion) and headline earnings per share will likely increase to between 28 435 cents and 30 716 cents (2020: 11 554 cents).
Amplats says headline earnings per share are likely to be at least 28 397 cents.
Rhodium prices surged to all-time highs in early 2021, but then fell by half in the second part of 2021, with PGM prices starting to firm again at the start of 2022.
SA producers account for more than 80% of global rhodium supply, a result of the relatively unique PGM geology on the sub-continent. Though rhodium represents a relatively small percentage of total PGM ounces produced, the surging price has had an outsized impact on bottom line results for producers like Amplats.
PGM prices in USD
Rhodium’s importance to car manufacturers has increased substantially, as it is a key element in autocatalysts used for both diesel and petrol vehicles.
Car makers started switching from platinum to palladium several years ago in part to reduce the risks of being exposed to South African producers at the mercy of volatile political and labour conditions.
PGMs are vital to the emerging green economy, particularly hydrogen fuel cells. This is likely to be a key dynamic in the PGM market in the decade ahead.
Amplats closed over 5% up (almost R100 a share) on Friday, at R1 948.56.