[miningmx.com] – ANGLO American said it was flexible on the shape of its proposed restructuring of Anglo American Platinum (Amplats), but added that the twin goals of reducing volumes and restoring profitability remained the same.
“Don’t be too worried if the restructuring is not exactly as we have said it,” said Chris Griffith, CEO of Amplats. He was responding to a question at Anglo American’s year-end results presentation regarding contingency plans if Amplats didn’t get its way on its proposed restructuring.
Amplats announced on January 14 that it intended to take out some 400,000 ounces/year of platinum productive capacity, a development that would affect up to 14,000 jobs among its ranks.
“It doesn’t matter if we say 14,000 jobs are affected or 8,000 jobs are retrenched. The messaging is the same,” said Griffith, who added that there had been a marked improvement in the intensity of consultations with unions and the South African government.
It would take about four months from the end of January before the restructuring would be complete owing to the extensive consultation period with government ministries and unions, Griffith said.
Amplats restructuring announcement came only weeks after a string of violent labour protests halted production at its operations, a condition that reverberated throughout the entire platinum industry in South Africa.
Anglo American said strike action hit operating profit by some $500m in the 2012 financial year. The largest affect on operating profit for the year, however, was price declines that CEO, Cynthia Carroll, said had been “across the board”.
Operating profit for the 2012 financial year came in at $6.1bn, some $4.9bn lower year-on-year of which lower metals prices comprised $3.9bn.
Anglo’s financial year was also blighted by capital impairments, mainly at Brazilian iron ore project, Minas Rio, where a $4bn post-tax write-down was recorded. A further $600m write-down was recorded reflecting the unviability of Amplats’ non-operating projects in the current price environment.
For all the criticism levelled at Minas Rio in particular, which is likely to cost $8.8bn to build, excluding the $6bn acqusition cost in 2007, Carroll sounded a defiant note, saying the rationale for the investment was unaffected by its scheduling delays and capital overruns.
“I have a mandate to pursue iron ore,” she said. “I remain confident in the quality, size and development potential of Minas Rio. It remains the largest undeveloped [iron ore] deposit. It’s strategic value is without question,” she said.
“This is fundamentally about long-term pain – especially for me – for long-term gain,” Carroll commented wryly in the presentation of the results to analysts.
In a media call shortly after publication of the results, Carrol said she expected improved trading conditions in its 2013 financial year with a stabilisation in both iron ore and copper markets.
“This year will be better than last year,” said Carroll. There will be a stabilisation and uptick in iron ore. Copper will be in balance this year.”
