ANGLO American Platinum (Amplats) warned full year share earnings ended December 31 would fall as much as 52% owing to inflation, project delays, and accounting recalculations related to a previous disposal and an acquisition.
2021 was also a bumper year after Amplats benefited from strong pricing, especially of minor metals, combined with the reopening of a processing unit which enabled it to clear a million ounces in platinum group metals (PGMs).
The forecast is for share earnings of between R14.431 to R20,128/share – a year-on-year decline of between 33% and 52% compared to R30,042 in full year earnings in the previous financial year.
Speaking on the sidelines of the Mining Indaba conference last week, Amplats CEO Natascha Viljoen said the outlook for metal prices in the current year was promising insofar as they would match last year’s average prices. “I’m not too bearish that we’ll see softer prices than 2021, probably in line with 2022.
“I think that we need to continue to remind ourselves that 2022 is still the second highest price environment in the history of PGMs,” Viljoen said.
PGM prices would also be supported by the slower conversion to electric vehicles (EVs) than anticipated. Viljoen said that automakers were relaxing their deadlines on the phasing out of internal combustion engines (ICEs) in favour of EV production. “The reality is if you look at the entire energy transition, the supply chain to make that transition is going to be way slower than we expected.”
“We’re seeing a number of OEM [original equipment manufacturers] … are starting to soften up.” Instead of EV production, they were working on engine efficiencies of ICE vehicles and favouring spend on hydrogen powered vehicles that require palladium and rhodium catalysts.
“So I’m not too concerned about the market,” said Viljoen. “I think it’s going to come out in the washing some way. I’m very bullish that ICE vehicles are not going to fall off a cliff and I think this transition is happening in a far more toned-down way.”
Prices may also be supported by a decline in primary PGM production from South Africa owing to interrupted power supply and curtailments in power supply as Eskom continued to struggle to manage its ageing fleet.
Speaking to Miningmx, Sibanye-Stillwater CEO Neal Froneman said production of PGMs from South Africa could fall as much as 25% this year. Unofficial estimates suggest output fell 10% last year. Said Froneman: “I think you can expect that number to double, maybe to 25% because curtailments have gotten worse”.
“That’s a lot. I’m not sure we’ll lose that,” said Viljoen. But she added that grid stability was an increasing problem for South Africa’s energy intensive users.
She also acknowledged blackouts were a growing concern but a wave of renewable projects was a countervailing force. “The small to medium enterprises stepping into this space is actually quite fascinating and amazing; quite encouraging if you look at embedded generation. So there is definitely huge momentum.”
