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Platinum Producer’s First-Half Profit Plunges, Output Falls After Prolonged Strike
JOHANNESBURG— Anglo American Platinum Ltd. AMS.JO +4.55% said on Monday it plans to sell some South African mines as it grapples with rising costs compounded by a five-month-long strike in the country.
The platinum producer also said its first-half profit plunged and it lost more than a third of annual production due to the strike that ended in late June.
“Both management time and capital are finite,” the world’s biggest platinum producer said on Monday. “The decision has been made to possibly exit certain assets that will be better placed in the hands of a new owner.”
Anglo American AAL.LN +0.59% Platinum said it would exit its Union and Rustenburg mines in South Africa and its Pandora joint venture. The Union and Rustenburg mines account for just over a quarter of Anglo American Platinum’s annual platinum production and more than half of its workforce.
The company said it is still assessing its Bokoni operation. Anglo American Platinum said it plans to retain its smelting and refining operations in both Union and Rustenburg. It will also keep its mine in Zimbabwe and several others in South Africa that have lower costs.
The decision to exit some of its platinum mines comes as the company works to return to full production following the end to the country’s longest ever strike. Anglo American Platinum lost more than 40% of its annual production and said it incurred 4.1 billion rand ($385 million) in costs in the January to June period due to the strike.
The company on June 24 agreed to a three-year wage increase, along with the two other big producers Impala Platinum Holdings Ltd. IMP.JO +1.32% and Lonmin LMI.LN +0.55% PLC. Anglo American Platinum said the new wage agreement that will increase the annual salaries of the majority of its workers by about $95 a month will add 10% to its overall labor costs in the first year.
Anglo American Platinum had warned at the conclusion of the strike that it was looking at restructuring its mines. Impala Platinum and Lonmin have also cautioned of possible job losses after the strike, which in the January to June period cost the companies more than $2 billion in lost revenue and led South Africa’s economy to contract in the first few months of the year.
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