JOHANNESBURG (miningweekly.com) – Six employees died in a year in which Anglo American Platinum (Amplats) chalked up R2.4-billion in free cash flow generated from its operations, doubled return on capital employed to 18% and reintroduced a cash dividend for the first time in seven years.

Productivity has soared by 58% since 2012 and the company now has 70% of its production in the first half of the cost curve.

"We're more efficient, we're more competitive and we're generating better returns," Amplats CEO Chris Griffith told a media conference in which Creamer Media's Mining Weekly Online took part.

Platinum group metals (PGM) production was five-million ounces in the 12 months to December 31, up on the 4.97-million of 2016, net debt was cut to R1.8-billion from R7.3-billion and a dividend of R3.49 a share declared compared with none since 2011.

Griffith said that platinum would likely be in a small surplus again, with demand exceeded by overall supply, but that forecasts suggested that the three major PGMs - platinum, palladium and rhodium - should collectively be in deficit again in 2018.

He said the outlook for palladium was positive once more with the number of vehicles produced likely to grow.

PGMs production guidance for 2018 is between 4.75-million ounces and five-million ounces and for platinum between 2.3-million ounces and 2.4-million ounces.

Rising vehicle production volumes and a healthy global economy should drive higher demand, while primary mine production is likely to be unchanged.

Amplats FD Ian Botha said in response to a balance sheet question that the first priority of the company was to restore strong balance sheet, which the company regarded as a true competitive advantage.

"We can see that the market is rewarding strong balance sheets," Botha said, adding that the company had confidence in underlying cash generation.

From a capital allocation perspective, the company's next priorities were around funding growth projects.

Botha said that the company had attractive growth potential at  its Mogalakwena and Der Brochen mines, where growth decisions would be taken at the end of 2019, as well as the declaration of additional dividends above its base dividend.

Griffith said in response to a currency impact question by Mining Weekly Online that the company had demonstrated that it was able to manage the business for the pricing environment that it had.

"What we haven't done is relied on the hope of a weaker rand, or whatever the case might be," the CEO of the JSE-listed company said.

What was traditionally seen, though, was that a strengthening rand was accompanied by a strengthening collective basket prices for the metals.

"That's exactly what we're actually seeing at the moment. We're seeing a dollar basket price strengthening and although we've seen only a marginal uplift in the rand basket price. But the fact is we will manage the business and if the prices in dollar terms are weak and the rand is strong, that means we'll have a lower rand basket price, so we'll have to manage the business for that," Griffith told Mining Weekly Online.

The price being obtained as a basket, he said, was between R26 400/oz and R26 600/oz, slightly up on the price in 2017.

China continued to be a very strong demand offtake for the industrial uses of PGMs, which was a third of overall platinum demand.

"Industrial grew very strongly at 6% last year. So when you see some of those very negative headline messages that say, look, Western Europe diesel is down therefore the whole demand basket is down, actually that is not entirely the case and we were only marginally down for auto last year, but we had very strong growth in industrial and a lot of that growth is coming from China.

"In addition to that, in heavy duty vehicles, we're seeing the demand for fuel cells in China picking up very strongly," Griffith told Mining Weekly Online.

Total PGM production was up 1% despite removing lossmaking production from Bokoni and Maseve as well as the unplanned stoppage at Mototolo to complete remedial work on the tailings facility.

There was record production from Mogalakwena and Unki, where there was a striving for operational excellence.