Anglo American Platinum (Amplats), the world’s biggest platinum producer, said yesterday that the supply and demand balances of the three main platinum group metals (PGMs) were likely to be in small deficits in 2023.
The Anglo American majority-owned group said in its 2022 results released yesterday that platinum’s underlying surplus had fallen in recent years, as supply had underperformed, while autocatalyst demand had improved.
“In 2023, whether it is in surplus or deficit would depend on the direction of investment demand; a return to more historically normal investor inflows would mean it will be in a small deficit,” it said.
“Palladium is set to see surpluses in the next few years, but in 2023 weak mine supply and robust automotive demand should keep it a deficit, albeit much smaller than in 2022.
“Rhodium is likely to be in a similar deficit in 2023 as it was in 2022, thanks to a rise in industrial demand offsetting higher supply,” the group said.
Amplats expects metal-in-concentrate and refined production to be between 3.6 million and 4 million ounces in its new financial year, while unit costs were forecast between R16 800 and R17 800 per PGM ounce.
Amplats CEO Natascha Viljoen said: “This financial year has seen us navigate a complex operating environment with macro-economic challenges, supply chain disruptions, socio-economic unrest, and electricity load-curtailment as well as some operational headwinds of our own.”
“But we have seen good levels of resilience across operations, and the team has worked through these challenges to deliver our mined production, refined production, and sales numbers for the year.
“The prior year benefited from an increase in refined production, which was due to a strong performance from the ACP Phase A leading to an additional drawdown of one million PGM ounces from work-in-progress inventory,” she said.
The company declared a final dividend of R9 billion or R34 per share, bringing the total for 2022 to R115 a share or R30bn, equivalent to a 62% payout of headline earnings.
Amplats said revenue for the year came in at R164.1bn compared with R214.6bn a year prior. Adjusted Ebitda was R73.9bn compared to R108.4 bn.
Headline earnings decreased from R79bn to R49bn. The return on capital employed of 111% highlights a strong financial performance. The company ended the year with a resilient balance sheet, with net cash of R28bn, Viljoen said.
In total, the group produced 4 million PGM ounces in 2022.
“While headwinds at Mogalakwena and Amandelbult impacted production, Mototolo and Unki delivered a strong performance, increasing mining activity to fill the increased concentrators’ capacities following successful de-bottlenecking projects,” she said.
She said Amplats’ refined production for the year of 3.8 million PGM ounces was despite a significant delay to its first Polokwane smelter rebuild in 12 years.
"The delay was due to the delivery to us of sub-standard materials, highlighting the need for our increased focus on supply chain reliability. Waterval and Mortimer's smelters achieved record utilisation.“
"We have a net build-up of work-in-progress inventory of only 100 000 PGM ounces. We are happy to report our Polokwane smelter is up and running and performing at its usual capacity," she said.
According to Viljoen, Amplats profitability was, however, impacted by above-inflation cost increases in utilities and consumables, in line with inflationary trends globally.
Looking ahead, Amplats expects metal-in-concentrate and refined production to be between 3.6 million and 4 million ounces, while unit costs are forecast between R16 800 and R17 800 per PGM ounce.
Anchor capital investment analyst Seleho Tsatsi said Amplats put out a trading statement earlier this month so the market had some line of sight coming into these results of what to expect.
"The biggest driver for Amplats’ results is of course the platinum group metal (PGM) basket price. Although the average basket price for 2022 was the second highest on record, it was down from 2021, which was the highest average basket price on record.
"The basket price has continued to come under pressure in 2023, which suggests further earnings challenges going forward unless we see an improvement in PGM prices. The dividend declared equates to a 62% pay-out ratio. That is high, but is below pay-out ratios seen from Amplats since 2020," Tsatsi said.
He said going forward, the market would be watching how the PGM basket price holds up as we potentially go into a global recession or economic slowdown.
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