CFO Craig Miller proud of Amplats’s record contribution to South Africa
The group has spent R39.2 billion on its stakeholders and economic contributions for South Africa.
Anglo American Platinum (Amplats) has generated record results for the first half of the 2021 financial year, with stakeholders across its value chain receivinging R39.2 billion from the company’s economic contributions.
“I am really proud of our record contribution to the South African society as a whole at a really challenging time for the country,” says CFO Craig Miller. “This is a new company high in terms of earnings, cash generated, and the strength of the balance sheet.”
He explains that Amplats spent R5.5 billion in salaries and wages, increased procurement from local and doorstep community suppliers with R2.2 billion, invested R5.2 billion on capital projects, spent R300 million on community development initiatives, and paid R16.6 billion in income taxes and royalties to the revenue authorities. The group also paid shareholders a record dividend of R9.4 billion.
Craig says that these record results reflect a number of contributing factors, including robust demand for platinum group metals (PGMs) resulting in record prices for rhodium and palladium. This increase in prices added R43 billion to Amplats’s EBITDA.
The other contributing factor was the group’s strong recovery in sales volumes (increasing 109 percent) on the back of the improvements in its refined metal production, which added R21 billion to Amplats’s EBITDA.
“A lot of work has gone into embedding operational resilience into the business, which has helped us better manage unexpected challenges for our business and our people, such as the impact of the Covid-19 pandemic,” says Craig.
Managing unexpected challenges
Craig explains that the impact of inflation on the back of rising electricity prices, wage increases above consumer price index (CPI), as well as higher material and metals prices (which are input costs in Amplats’s production process), have been a challenge.
Due to these factors, inflation in the business is around eight percent – well above CPI. “This requires us to be agile in our response to rising costs through our business improvement programs, which look to take our asset performance to global best-in-class and then beyond,” Craig says. “We have some assets which are operating at world best practice, but through our deployment of technology and operating discipline we can do more.”
On top of this, Covid-19 continues to have an impact on how Amplats operates. “Our supply chain for goods and services has been, and continues to be disrupted, which requires the teams across the business to be creative and very engaged with our suppliers,” Craig explains.
Amplats has also seen increased absenteeism of some of the group’s workforce either isolating or recovering from the virus, and has had to revise working practices to protect the health and wellbeing of their colleagues.
Craig explains that, in the first half of the year, Amplats had around 15 percent lower production at its operations because of Covid-19 and incurred around R0.3 billion in additional costs to mitigate the impact on the business. “Furthermore, we cannot afford to take for granted the impact that the pandemic has had on the mental wellbeing of our people, and we have put mental health support programmes in place to help our people navigate this ‘new normal’,” he adds.
He explains that “the pandemic has also accentuated the vulnerabilities that exist in our society”. He adds that, through its wide reaching WeCare programme, Amplats has been able to better understand the vulnerabilities of its host communities and has provided support through various education, supplier development and collaborative regional development initiatives.
In response to the impact of the Covid-19 pandemic and also the recent unrest, Craig says that Amplats are making an additional R400 million investment to support its WeCare programme and the relief efforts to rebuild SA.
Further improving operations
Craig says that Amplats continues to make investments into its business and is looking to spend around R13 billion on capital expenditure this year as it invests to maintain the integrity of its assets, debottleneck a number of its operations, as well as advancing feasibility studies to expand further PGM production.
“We are also really excited about the future of PGMs supporting a greener economy with the progression on a number of our market development activities during the first half of the year, focused on the hydrogen economy, as well as the usage of PGMs in food preservation and medical applications and treatment,” Craig says.
He concludes that Amplats would not have been able to deliver such an impressive set of results were it not for its people and how they helped the group reimagine mining to improve people’s lives.