Anglo American Platinum sees a surplus of platinum-group metals this year as demand from makers of jewellery and car catalytic converters drops, weighing on prices and adding to pressure on miners.
Lower demand follows falling sales of diesel vehicles in Europe, which use platinum to cut pollution, and a slowing Chinese jewellery market, the Johannesburg-based company said in a statement on Monday. Amplats, as the miner majority owned by Anglo American is known, is the world’s biggest producer of the metal.
“The PGM basket price is likely to remain subdued in the near term and as a result we’ll continue to manage the business for a low price environment,” chief executive officer Chris Griffith said on a call with reporters.
Platinum prices are down almost by half in the past six years as the metal lost popularity as a haven investment. Supply from top producer South Africa has remained high even as demand has flagged from an auto industry moving toward emission-free electric vehicles.
As the largest producer with some of the industry’s lowest cost mines, Amplats is better placed than some. About 65% of the industry is loss making and a further 5% is “on the breadline,” Griffith said. “This kind of production environment is undoubtedly likely to lead to further production cuts.”
Amplats fell 2.4% to R304.14 by 10:20am in Johannesburg.
The company recorded R2.2 billion ($170 million) of asset writedowns in the first half, leading to a 55% drop in headline earnings to about R750 million . It’s selling or shutting its highest-cost mines and aims to improve productivity, Griffith said. Amplats plans to cuts costs by a quarter at the unprofitable Amandelbult, its second-biggest mine.
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