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Anglo American Platinum plans to cut 3,700 jobs in South Africa in a bid to reduce costs and turn around fortunes for one of the British mining group’s most troubled divisions.
Amplats said on Monday it would reduce its headcount by almost a fifth, after a 71 per cent fall in annual profitability following a sharp drop in platinum group metal prices, which are primarily used in the exhausts of petrol and diesel vehicles. The company also plans to review contracts with 620 services providers.
Anglo American, which owns 79.2 per cent of Amplats, has singled out platinum group metals (PGMs) as one of the two commodities in its portfolio, along with diamonds, that has been struggling, contributing to a 45 per cent fall in its shares in the past year.
The job losses, which are subject to consultation and match the size of those made by industry rivals such as Sibanye-Stillwater, pose a headache to South Africa’s ruling African National Congress during a key election year in a country already wracked with mass unemployment.
Craig Miller, chief executive of Amplats, said the job cuts would have a “socio-economic impact” adding that it was “important to understand that this has been a decision taken as a last resort for the company”.
Despite the restructuring, Amplats declared a R5.7bn ($301mn) dividend for 2023, representing 40 per cent of its headline earnings but down by 81 per cent compared with a year ago. The group’s headline earnings fell to R14bn, from R48.8bn in 2022.
Prices of palladium, one of the six key PGMs, have dropped 60 per cent in the previous two years to about $950 per ounce, the lowest level in almost six years. Platinum has been down 18 per cent over the same period.
That marks a stark reversal from two years ago when the industry was reporting bumper earnings off the back of surging prices for palladium and rhodium, as automotive demand ran hot.
PGM producers are struggling with a structural decline in demand caused by the shift to electric vehicles, which displace combustion engine vehicles that need those metals to produce catalytic converters that reduce harmful emissions.
Competitor Sibanye-Stillwater has flagged that it could restructure lossmaking PGM mines including potentially shutting them down at the expense of more than 4,000 jobs.
Amplats, the industry leader which mines 40 per cent of the world’s PGMs, said on Monday that the palladium market would move into a surplus in 2025 as the automotive industry shifts to EVs after a deficit in the year ahead. It added that platinum will be in a small deficit in the next few years and rhodium will be oversupplied in 2025.
Anglo American’s chief executive Duncan Wanblad has consistently defended both Amplats and diamond unit De Beers as having a bright future, even as he comes under pressure to take more radical action after the group has badly underperformed BHP, Rio Tinto and other rivals.
The cost-cutting measures by Amplats come ahead of Anglo American reporting annual results on Thursday where investors will be looking for any signs of how Wanblad might be planning to reshape the 107-year-old company.
