Anglo American Platinum (AMS), or Amplats, is the second-largest platinum producer in the world (after Sibanye) and plays a key role in the platinum group metals (PGM) industry. The company is 77.62% owned by Anglo American and has been at the forefront of transitioning from deep-level mining to shallow, mechanized mining, which has significantly improved efficiency and reduced costs.
Strategic Developments & Operations
Over the past five years, Amplats has reduced its number of mines from 18 to 7, cut overheads by 50%, and halved its workforce. This restructuring has enhanced profitability, particularly through its Mogalakwena open-cast mine, a palladium-rich operation with some of the lowest costs in the industry worldwide.
A new project at Mogalakwena is set to increase platinum production by 250,000 ounces and palladium production by 270,000 ounces. Amplats also acquired Glencore’s 40.2% stake in the Mototolo mine and the adjacent Der Brochen property for R1.5 billion, enabling a cost-effective expansion without additional surface infrastructure.
However, platinum prices remain under pressure due to an effective recycling industry, which adds about 2 million ounces per year to the supply by recovering metal from old auto catalysts. Despite this, we believe Amplats remains the best of the PGM shares on the JSE, although it is highly volatile as a commodity stock.
Key Risks & Challenges
- As part of its Mogalakwena expansion, Amplats plans to relocate 1,000 families, which could lead to social unrest.
- Loadshedding and falling PGM prices continue to be significant headwinds.
- The company announced the retrenchment of 3,700 employees on 19th February 2023.
- On 23rd July 2024, Business Day reported that Amplats was considering listing on the London Stock Exchange (LSE).
Financial Performance
In its results for the six months to 30th June 2024, Amplats reported:
- Tonnes milled down 7%
- Refined PGM production up 5%
- Revenue down 19%
- Headline earnings down 18%
The company explained, "Realised PGM dollar basket price fell 24% to an average of US$1,442 per PGM ounce due to declining realised palladium and rhodium metal prices, which were 34% and 49% lower, respectively."
In its third-quarter update for 30th September 2024, Amplats reported:
- PGM production from own-managed mines down 9%
- PGM sales volumes up 16%
- Maintained 2024 production guidance at 3.3-3.7 million PGM ounces
- Increased refined production guidance to 3.7-3.9 million ounces
In a trading statement for the year to 31st December 2024, the company estimated HEPS would decline by 36%-46%, stating, "The decrease in earnings compared to 2023 is primarily due to a 13% decline in realised ZAR PGM prices. Most notably, palladium and rhodium realised US dollar prices decreased 24% and 30%, respectively."
Technical & Investment View
- The share price has been declining since March 2022, driven by loadshedding, weaker PGM prices, and industry challenges.
- Recently, it has moved sideways, indicating some stabilization but no clear upward trend yet.
- PGM prices remain under pressure, which could limit near-term upside.
Conclusion: Amplats remains a high-quality, but highly volatile commodity share. It is largely dependent on PGM prices, making it speculative. While long-term fundamentals remain strong, the current market conditions and price pressures make it risky in the short term. Investors should wait for a clear break above the downward trendline before considering an entry.
Strategic Developments & Operations
Over the past five years, Amplats has reduced its number of mines from 18 to 7, cut overheads by 50%, and halved its workforce. This restructuring has enhanced profitability, particularly through its Mogalakwena open-cast mine, a palladium-rich operation with some of the lowest costs in the industry worldwide.
A new project at Mogalakwena is set to increase platinum production by 250,000 ounces and palladium production by 270,000 ounces. Amplats also acquired Glencore’s 40.2% stake in the Mototolo mine and the adjacent Der Brochen property for R1.5 billion, enabling a cost-effective expansion without additional surface infrastructure.
However, platinum prices remain under pressure due to an effective recycling industry, which adds about 2 million ounces per year to the supply by recovering metal from old auto catalysts. Despite this, we believe Amplats remains the best of the PGM shares on the JSE, although it is highly volatile as a commodity stock.
Key Risks & Challenges
- As part of its Mogalakwena expansion, Amplats plans to relocate 1,000 families, which could lead to social unrest.
- Loadshedding and falling PGM prices continue to be significant headwinds.
- The company announced the retrenchment of 3,700 employees on 19th February 2023.
- On 23rd July 2024, Business Day reported that Amplats was considering listing on the London Stock Exchange (LSE).
Financial Performance
In its results for the six months to 30th June 2024, Amplats reported:
- Tonnes milled down 7%
- Refined PGM production up 5%
- Revenue down 19%
- Headline earnings down 18%
The company explained, "Realised PGM dollar basket price fell 24% to an average of US$1,442 per PGM ounce due to declining realised palladium and rhodium metal prices, which were 34% and 49% lower, respectively."
In its third-quarter update for 30th September 2024, Amplats reported:
- PGM production from own-managed mines down 9%
- PGM sales volumes up 16%
- Maintained 2024 production guidance at 3.3-3.7 million PGM ounces
- Increased refined production guidance to 3.7-3.9 million ounces
In a trading statement for the year to 31st December 2024, the company estimated HEPS would decline by 36%-46%, stating, "The decrease in earnings compared to 2023 is primarily due to a 13% decline in realised ZAR PGM prices. Most notably, palladium and rhodium realised US dollar prices decreased 24% and 30%, respectively."
Technical & Investment View
- The share price has been declining since March 2022, driven by loadshedding, weaker PGM prices, and industry challenges.
- Recently, it has moved sideways, indicating some stabilization but no clear upward trend yet.
- PGM prices remain under pressure, which could limit near-term upside.
Conclusion: Amplats remains a high-quality, but highly volatile commodity share. It is largely dependent on PGM prices, making it speculative. While long-term fundamentals remain strong, the current market conditions and price pressures make it risky in the short term. Investors should wait for a clear break above the downward trendline before considering an entry.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.