Our opinion on the current state of AMPLATS(AMS)Anglo American Platinum (AMS), or Amplats, is the second-largest platinum-producing company in the world (after Sibanye), producing a large portion of the world's platinum. It is owned 77,62% by Anglo American.
Amplats was one of the first platinum mining companies in South Africa to move away from expensive deep-level mining towards shallower, more mechanised mining. The company has reduced the number of mines it is operating from 18 to 7 over the past five years, decreased overheads by 50%, and its number of employees by 50%. This shift is now paying handsome dividends.
The Mogalakwena open-cast operation is a palladium-rich operation with costs in the lowest quartile in the platinum group metals (PGM) industry worldwide. A new project at Mogalakwena will see platinum production up by 250,000 ounces and palladium production up by 270,000 ounces. Amplats also recently bought out Glencore's 40,2% stake in their joint venture Mototolo mine and the adjacent Der Brochen property for R1,5bn. Mototolo is a highly mechanised shallow mine that can be extended into Der Brochen without putting in new surface infrastructure.
The platinum price is plagued by an effective recycling industry that produces about 2 million ounces a year by recovering from old auto catalysts. We believe AMS is the best of the PGM shares on the JSE - but it remains a commodity share and thus volatile and unpredictable.
As part of its plans to boost production at Mogalakwena, the company has plans to relocate 1,000 families of its employees, which could result in unrest. On 10th December 2021, the company announced a R3,9bn extension to the life of its Mototolo/De Brochen mines to beyond 30 years. On 15th February 2023, the company announced that CEO, Natascha Viljoen, would resign but would serve out her 12-month notice period.
In its results for the year to 31st December 2024, the company reported revenue down 13% and headline earnings per share (HEPS) down 40%. The rand basket price per PGM ounce fell by 13%, and costs per 3E ounce were down 13% in US dollars. The company said, "EBITDA of R19.8 billion, is 19% lower than the prior period, largely due to a ~13% decline in the realised ZAR PGM basket price and R3.5 billion of non-recurring costs owing to the recent operational and corporate restructuring, the demerger and losses from associates."
This share is a speculation on the international prices of the platinum group metals that it produces and hence very volatile. Technically, the share has been moving sideways since September 2023, mainly due to the challenges faced by the industry, including load-shedding and the falling prices that they are getting for their production.
On 23rd July 2024, *Business Day* reported that Amplats was considering listing on the London Stock Exchange (LSE).
