Anglo American Platinum Posts Loss on Strikes, Surging Costs

Anglo American Platinum Ltd., the biggest producer of the metal, reported a loss for 2012 and continues to suspend its dividend as sales of refined platinum fell and cash operating costs rose.

Anglo American Platinum had a so-called headline loss excluding one-time items of 1.47 billion rand ($166 million), or 5.62 rand a share, from a profit of 3.57 billion rand, or 13.65 rand a share, the Johannesburg-based company said in a statement today. The average estimate of seven analysts surveyed by Bloomberg was for a loss of 5.59 rand a share. The company last year skipped its interim dividend.

The company, controlled by Anglo American Plc and known as Amplats, last month proposed to shut four mine shafts to curb costs and stem losses spurred by a two-month strike last year. The plan, which would cut about 7 percent of global output, was put on hold following criticism from the South African government. The postponement allows for talks with the Department of Mineral Resources and unions.

“We need to take action to turn this business around,” Chief Executive Officer Chris Griffith said on a conference call today. “Primary supply challenges will continue in 2013.”

Local analysts use headline earnings as the benchmark measure of company performance. Amplats reported an attributable loss of 6.68 billion rand compared with a profit of 3.59 billion rand. Cash operating costs increased 21 percent to 16,364 rand per refined ounce, it said.

Output Drop

Refined platinum production at its operations declined 8.8 percent to 1.77 million ounces, while total platinum group metals output fell 6.7 percent to 3.5 million ounces.

“It is a very difficult time for the company,” Ryan Wibberley, a trader at Investec Asset Management, said by phone from Cape Town. “It is disappointing not to see a dividend, although it isn’t a surprise.”

The shares were little changed, closing 0.1 percent lower at 447.55 rand in Johannesburg.

Part of Amplats’s restructuring proposal included the sale of the Union operation. The company has received expressions of interest for the mine as well as for Pandora, Griffith said.

Debt at Amplats, which has 12 billion rand in undrawn committed credit facilities, rose by 7 billion rand last year and should start to decline from 2014, Finance Director Bongani Nqwababa said.

“We get preferential rates on our credit lines of around 6 percent,” Nqwababa said in a telephone interview. “It’s unlikely we’ll go to the debt capital market.”

Anglo American will report an underlying loss in respect of Amplats of $225 million for the year through December, it said in a statement today.