Amplats delivers impressive dividend for the year

CEO Natascha Viljoen notes: ‘It’s one of those unique times where production and price come together, and we’ve managed … a relevant payback to … financial shareholders and the broader SA economy’.

PETRI REDELINGHUYS: I’m Petri Redelinghuys, standing in for Fifi Peters. We are now speaking to the CEO of Anglo American Platinum, Natascha Viljoen. Natascha, good evening and welcome and thank you for your time tonight.

NATASCHA VILJOEN: Good evening, Petri.

PETRI REDELINGHUYS: Firstly, I’d like to say ‘Wow!’ A R300 dividend for the whole year –that is really, really impressive.

NATASCHA VILJOEN: Yes. I think that is really on the back of a good set of results, and I think, Petri, it’s probably just important for us to note that it has been influenced by two major factors.

The one is that I’m not sure whether some of your listeners might remember that in 2020 we had a breakdown on one of our furnaces that resulted in about a million ounces of metal locked up in inventory and, due to the very good work that our processing team has done over the last 18 months, they not only managed to rebuild that facility, run it very stably and reliably, and depleted most of that inventory that we built in 2020.

On top of that we obviously see record prices. That softened a little in H2, but despite that we saw record prices for the year. So it’s one of those unique times where production and price come together, and we’ve managed to deliver very good set of financial results with a relevant payback to both our financial shareholders and the broader South African economy.

PETRI REDELINGHUYS: Yes. I was looking through some of these numbers; the contribution that you make to the South African economy is massive. I think there’s BEE procurement of around R28 billion, R14 billion paid in salaries and wages, capital investment of R14 billion, social investment, community development spend in Covid-19 support to the tune of R2 billion, a contribution to the fiscus of both South Africa and Zimbabwe of around R35 billion round in taxes. That is huge.

It’s also very pleasing to see that there’s a very big dividend – well, another one I suppose – coming to shareholders.

I’ve got a couple of questions for you which I guess may seem a little unfair. The first is, going forward into the next financial year are you looking to increase production, continue to ramp up production, or are you sort of happy to stabilise at this level?

NATASCHA VILJOEN: Petri, we will be stabilising at pre-Covid levels, just considering some of the areas we’ve mined out at Amandelbult and Kroondal specifically. You would’ve seen in the last year we also announced the sale of our agreements with our JV in Kroondal and Marikana. So we will see some reduction in certain of our areas, but we’ll see an increase in areas like Unki and Mototolo, where we completed the bottlenecking projects in the last year. So we will see offsets coming through from various areas in the business.

PETRI REDELINGHUYS: So that sort of results in a stabilisation of production, so you might be ramping up in some areas.

NATASCHA VILJOEN: Right.

PETRI REDELINGHUYS: Sibanye-Stillwater mentioned that they are somewhat worried that increased production from the likes of Anglo American Platinum could potentially damage prices in the market going forward. So is this a worry that they need not have, or are you coming to eat their lunch?

NATASCHA VILJOEN: I think if we look at our forecast for the metals, we are forecasting a deficit in the market for all three of our main metals going forward for the next three to five years. That deficit will still certainly support a good level of prices, so I’m not too concerned that anything will happen in the near term.

I think the other aspect that’s really important for us as Anglo American Platinum is just our capital discipline, and that capital discipline I think played itself out through this past year with returning money to our shareholders as well. That capital discipline requires us to very carefully consider what the markets are going to do, and what the risks in the markets are. Considering the uncertainty around how the transition of the drivetrain will take place, we need to be considerate and build optionality in our business to respond. I would argue that our capital discipline will ensure that that we do consider that it’s in nobody’s interest for us to oversupply, and it’s also in nobody’s interest for the prices to be unsustainably high.

PETRI REDELINGHUYS: Fair enough.

NATASCHA VILJOEN: I think in addition to that, what I would like to add is, over and above being conscious in terms of capital discipline, we’re also taking ownership of our future and really developing the market. I think Anglo American Platinum is doing a unique amount of work in investing back into markets and product development. That will all then also help to offset any risk of more oversupply and a negative impact on prices.

PETRI REDELINGHUYS: All right. And then one last question – all we have time for really – with Ukraine and Russia on the brink of who knows what, that’s around 20% of the supply of PGMs, if I’m not mistaken. How much of an opportunity is that for you as Anglo American Platinum to maybe fill a bit of the supply that might leave the market for a few months?

NATASCHA VILJOEN: Petri, it’s very difficult to just ramp up the supply in a very short span of time. I think the benefit that we will see coming through isn’t probably in prices. We’ve seen the volatility rise as the digital geopolitics are developing. Just considering palladium, Russia is making out about 28% of palladium production. I think it is important to note there, though, that I don’t believe that they will stop producing. You will probably see an increase in stock in Russia. That will just then be released, either through other avenues over a period of time or then when the geopolitics clears itself out. So it would be, I would argue, a short-term impact and higher palladium prices.

PETRI REDELINGHUYS: All right. But nothing really significant that’s going to significantly impact the bottom line in the next set of results kind of thing? Well, I guess we’ll see how it turns out.

NATASCHA VILJOEN: Yeah. If you see record prices in palladium, we will be continuing to put metal in the market at very good prices that will obviously flow through into the bottom line.

PETRI REDELINGHUYS: All right. Thank you very much for your time, Natascha. Unfortunately we are out of time, but I appreciate you chatting with us this evening. Once again, well done on a really stellar set of results. It’s been a fantastic year for [the company] and its shareholders as well.

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