JOHANNESBURG (miningweekly.com) – Platinum group metals (PGMs) mining and marketing company Anglo American Platinum on Monday declared an interim dividend after achieving results in line with changed guidance.

An interim dividend of R3.1-billion for the first half of 2023 was paid, in line with the company's dividend policy of a 40% payout of headline earnings.

On half-year capital expenditure (capex), Anglo Platinum FD Craig Miller said in response to Mining Weekly that about R4.5-billion was on stay-in-business capital and R1-billion on growth capex, the growth capex being predominantly linked to the future of the Mogalakwena mine, where exploration decline work is being undertaken as well as progressing studies associated with the future of Mogalakwena work.

“We’ve also spent and we continue to spend on the Mototolo/De Brochen life extension project. That’s continuing the life of Mototolo and we’re looking at spending around R3-billion this year on that particular investment,” Miller added.

Owing to maintenance days being aligned with local curtailment days, the Johannesburg Stock Exchange-listed company reported that its mining operations managed to stave off being impacted by 42 days of first-half load curtailment.

On initiatives and working groups within South Africa’s National Energy Crisis Committee (Necom) to focus on the expedited implementation of the Presidential Energy Action Plan, outgoing CEO Natascha Viljoen said in response to Mining Weekly that Anglo Platinum had done “quite a bit” in that partnering process with Necom to support Eskom, “and it’s a partnership not a support, I think that’s really important”.

“From that point of view, we feel quite encouraged on the opportunities for us. As South Africans, we’re all keen to make an impact and to help in those areas, and that is encouraging,” Viljoen added.

Half-year earnings before interest, taxes, depreciation and amortisation (Ebitda) were 69% lower year-on-year at R13.4-billion on lower prices, lower sales volumes, and higher costs, but the mining Ebitda margin generated was a solid 42%.

The Johannesburg Stock Exchange-listed company’s balance sheet remains strong, with net cash of R23.9-billion.

Total PGMs production decreased by 7% to 1 844 300 PGM ounces and refined PGMs production decreased by 13% to 1 699 800 PGM oz.

PGM sales volumes decreased by 12% to 1 807 300 PGM oz, in line with lower refined production, and PGM trading volumes increased by 214% to 2 065 200 PGM oz, in line with the strategy for greater participation in the market.

Guidance for the year remains unchanged, with between 3.6-million and 4-million PGM oz, subject to the impact of Eskom load curtailment. Unit cost guidance for 2023 remains between R16 800 and R17 800 per PGM oz and is expected to be at the upper range of guidance. In 2023, total capex is expected to remain within the market guidance of  R22-billion.

In terms of market outlook, platinum is expected to remain in deficit over the next few years, as automotive demand gains from ongoing substitution of palladium in gasoline catalysts. Palladium is expected to move into surplus for the opposite reason, though to what extent will depend on what happens to automotive production and battery electric vehicles’ share of it. Rhodium will remain in a small surplus, assuming further disposals from the fibreglass industry.

Emissions legislation around the world, the growing hydrogen economy and demand for PGMs in industrial applications should see global demand grow in future. Investment in assets and market development efforts are described as being well-positioned to take advantage of future demand.

PRICES WEAK

PGM prices were mostly weak in the first half of 2023, as an uncertain macro-economic backdrop was overlaid with metals-specific negative factors. The PGMs average realised basket price was $1 885/oz, 29% lower than in the same period of 2022. This weak performance was owing to sizeable declines seen in rhodium and palladium, taking both to multi-year lows.

Rhodium averaged $8 957/oz - an historically high figure but one that was 48% lower than in the same period of 2022.

Palladium averaged $1 505/oz, 32% lower than in the same period of 2022. In contrast, platinum’s average of $1 009/oz in the half-year was 1% higher year-on-year, and 9% up on the second half of 2022.

The minor PGMs, iridium and ruthenium, saw little price change, remaining at elevated historical levels.

PGMs demand is set to rise modestly in 2023, supported by ongoing capital projects in China. Rhodium industrial demand, however, has been hit by disposals from the fibreglass industry. Platinum jewellery demand is forecast to stabilise, though much will depend on the Chinese market.

On the supply side, underlying PGMs mine production in South Africa was lower than in the same period of 2022, but not significantly so, with the industry coping well with challenges caused by a shortage of electricity.

“We are consistently working towards safe, stable, and capable operations, as this is a critical foundation for zero-harm production.

“In the first half, we recorded no fatalities and reached a record low total recordable case frequency rate of 1.58 per 1 million hours worked. This represents a year-on-year improvement of 34% and an 85% improvement from 2012,” said Viljoen, who described as imminent the announcement of the name of her successor.