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Amplats declares record dividend as earnings rocket

CEO Natascha Viljoen reflects on the company’s vaccination rollout, product demand, power generation, new appointments and the doorstep social development programme.

FIFI PETERS: Shares of Anglo Platinum soared on the JSE today (July 26, 2021) after the miner paid a record dividend, boosted by the shine higher metal prices and increased production gave to profits. I have Natascha Viljoen, the CEO of Anglo American Platinum, here for more on the results. Natascha, thanks so much for your time. Your shareholders are clearly very happy with your performance. My question to you is: has ‘business as usual’ returned to your mine, or are there still teething issues related to the pandemic that you’re dealing with?

NATASCHA VILJOEN: Good afternoon, Fifi, and good afternoon to your listeners. Fifi, I think we have managed to return our business to a new level of normal. We’ve certainly developed an approach to live within the constraints that Covid brings. It does not mean we are not impacted, though. We do see a continuous impact on high infection rates coming through, specifically as we’re just coming through the third wave, and that the systems and processes that we’ve set up that require us to be continuously agile, to adapt as the development of the virus is obviously very unknown to us.

I think it’s therefore very important for us to reflect on the vaccine programme, and the real importance of getting the vaccine programme up and running – which we’ve been able to do in the past 10 days; we are very excited to be able to offer the vaccines to our colleagues in the workplace.

FIFI PETERS: How many miners have you been able to vaccinate so far?

NATASCHA VILJOEN: Our numbers are pretty low still, Fifi. We are just close to about 2 000 of our colleagues, considering that we’ve got 30 000 own employees and contractors. But we’ve only got four facilities, with the fourth facility’s final approval only as recently as Friday. That is, over the last 10 days, confirming all four sites and starting to get the vaccination process under way. We’ve started to see the numbers picking up at all of our assets, and we believe that we will very soon be in a position to reach our target of about 1 900 vaccines a day.

FIFI PETERS: Going back to your production results, we did see that you were able to mine a lot more this time around as a result of the lockdowns being lifted. Where are you seeing the biggest demand for your product?

NATASCHA VILJOEN: The biggest demand for our product remains in the automotive sector, which is about 60% of where our product gets deployed in autocatalytic converters, specifically around cleaner emissions of internal combustion engines. That is the biggest application of our metals.

I think it’s probably worthwhile to quickly reflect that we’ve got a big suite of metals and, even though this represents the biggest demand for our metals, we also have significant demand from industrial jewellery and health – and very interesting future demand from food and food preservation.

FIFI PETERS: Your sister company, Kumba, has said that it has lost out on sales in the coming reporting period owing to rail constraints and getting its goods out to its clients on time. Have you experienced similar transport challenges with your metals?

NATASCHA VILJOEN: Our metal flow, much in terms of volume, is much lower than that of Kumba, and we are not making use of Transnet to get the bulk of our metals out. We do, however, produce bulk base metals – copper, nickel and chrome. Those were marginally impacted, but not significantly.

FIFI PETERS: Natascha, there’s a concern that the higher prices of commodities that you mine, among others, may drive higher inflation from increasing the price of electronics to cars and even jewellery, for instance. Are you seeing inflation in the system, and do you think that it’s here to stay or is it just passing by?

NATASCHA VILJOEN: We’ve definitely seen higher than planned mining inflation, firstly as all commodity prices are soaring – not only PGMs, but copper, nickel and iron ore. We obviously as an end-user of some of those products see that coming through. I think just the disruption in the supply chain due to Covid has definitely seen price increases coming through, so we are predicting for the second half higher than planned inflationary pressures on our costs.

FIFI PETERS: Talking about costs, what are your plans to have more control over your energy and electricity costs, for instance, since government has raised the level of power the private sector can generate for itself?

NATASCHA VILJOEN: Obviously we’re a big consumer of power from Eskom, but we’re also a big consumer of diesel and coal. So we do have set targets for 2040, when we want to be carbon-neutral. If we look at the process for us to achieve that full carbon neutrality, it requires us to look at a very holistic long-term plan on how we get all of our sites on renewables.

If I pull that forward very close to the near term, the first place where we’ve started to test our ability to do this is at our Mogalakwena operation making out about 25% of our energy consumption. About 17% of that is in diesel consumption in our load and whole fleet specifically. We are currently in the last stages of appointing a partner to build a PV (photovoltaic) plant that will then feed energy to generate green hydrogen, and ultimately use that green hydrogen in a 300-tonne haul truck making use of a fuel cell as part of the drive train.

That is the first step in a much larger strategy for us to get our business onto renewable energy.

FIFI PETERS: I see that today you made two new appointments to your board, both of whom happen to be female, Natascha. So what does the level of female representation on your board look like after these appointments?

NATASCHA VILJOEN: I think we’ve got a very balanced 50:50 ratio now between female and male. I’m very pleased with those appointments, and obviously very grateful to the outgoing board members for their contribution, which has been significant. But we are very excited about the new appointments. I think not only do the new appointments increase the diversity on our board even further, they also reflect our strategic priorities.

FIFI PETERS: One of those strategic priorities nationally is to rebuild the country, and rebuild it more inclusively. What role can the mining sector and companies like Amplats play, Natascha, in growing the economy and helping to create jobs?

NATASCHA VILJOEN: I think that’s such an important question and, as we report record performance, a question on how we balance value creation for all our stakeholders.

Firstly, I think it’s important for us to remember that when the mining sector is successful in deploying our shareholders’ money into the right capital allocation and we can generate returns, a big portion of those returns go back into the fiscus. So if we look at our first-half performance, R16.6 billion did go back in taxes and royalties, and that’s an uplift of R14.4 billion half on half.

The other factor is then of course employment. In the first half we spent R5.5 billion on salaries and wages.

Another very important aspect is how we do local economic development. This is a big focus for us in terms of our licence to operate. As an example there, our procurement on direct doorstep-community spend for the first half was R2.2 billion. If you consider that for the full year last year it was R3.6 billion, our forecast when we double that to go up to R4.4 billion represents a significant year-on-year increase in the spend on doorstep communities.

We’re very excited to see doorstep community businesses coming through. We’ve been able to allocate quite large contracts – a recent contract that we allocated for the transport of concentrate between our mines and our smelters has been all allocated to doorstep community members. I’m very excited to see that contribution and the economic development in our doorstep communities coming off the ground.

And then of course there’s the normal kind of social and labour plan and direct other community-development work that we are also doing as part of our mining rights.

FIFI PETERS: All right, Natascha, it looks like you do have a lot on the go there. We do certainly hope that they’ll yield results for the economy. But thanks so much for your time. We’ll leave it there. Natascha Viljoen is the CEO of Anglo American Platinum.

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Good move on solar to hydrogen for the fleet. Not just the technically clever for a private fleet with private depot, but hydrogen fuel cells also use Amplats metals. Next up : stored solar for other mining operations. The mines have hundreds of acres of dead ground.

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