Anglo American Platinum Ltd. (AMS) sees its unions recognizing the need to pursue plans to cut thousands of jobs in talks with the world’s largest producer of the metal even after the company returned to profit in the first half.
“The last few weeks have been constructive,” Chief Executive Officer Chris Griffith said on a call. “There is a realization that this is likely to happen and must happen.”
Plans by Amplats, as it’s known, to cut 6,000 jobs, idle three shafts and reduce annual output by 350,000 ounces were initially opposed by unions. Talks on the terms of voluntary cuts and early retirement are scheduled to end Aug. 10 at the Commission for Conciliation, Mediation and Arbitration.
Amplats today posted first-half net income of 1.15 billion rand ($117 million), or 4.67 rand a share, from a loss of 450 million rand, or 1.77 rand, a year before. Headline earnings excluding one-time items rose 88 percent to 1.34 billion rand.
The rand’s 14 percent drop this year helps Amplats counter above-inflation gains in wage and power costs as it pays for those in the South African currency and sells metal in dollars. Local costs are still rising with unit charges expected to reach 17,000 rand per equivalent refined platinum ounce, Griffith said, compared with a Feb. 4 estimate of 16,000 to 16,500 rand.
Amplats will begin wage talks with unions in a month. The Association of Mineworkers and Construction Union wants entry-level wages for underground workers to be more than doubled.
“The need to restructure the company -- to restore profitability and align production with market demand -- has not diminished and it is required for the long-term sustainability of Anglo American Platinum through the cycles,” Griffith said in an e-mailed statement. “Mining inflation has remained well above the South African consumer price index and labour unrest linked to union rivalry continues to present challenges.”
The company’s Rustenburg operations suffered net cash outflows of about 1 billion rand in the first half, Griffiths said. The figure includes capital costs.
Amplats produced 1.2 million ounces of equivalent refined platinum in the half, unchanged. It lost about 20,000 ounces in production from illegal work stoppages, another 3,000 ounces because of a bus strike, as well as about 30,000 ounces due to its inability to redeploy workers, Griffith said.
Net demand will be flat in 2013 as European vehicle sales are depressed and jewelry and investment demand is sensitive to prices, Griffith said. Platinum is used to cut car emissions.
Amplats avoided paying an interim dividend for a second year as lower cash from operations boosted debt and future funding needs, it said. Net debt rose to 13.2 billion rand from 10.5 billion rand in December 2012 and capital expenditure fell 22 percent to 2.3 billion rand in the half. The company is set to spend as much as 7 billion rand this year, it said.
Amplats raised its refined platinum output target for the year to 2.3 billion ounces, from a range of 2.2 million to 2.3 million after delays in plans to trim operations.
Platinum slipped 0.4 percent to an average $1,549 an ounce in the first half compared with a year earlier.
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