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January 14, 2013 3:44 pm
The world’s biggest platinum producer by volume said it expected a headline loss per share for the year ended December 31 of between 491 cents and 628 cents, compared with a profit of 1,365 cents reported in 2011.
The bleak news was delivered at a time when Anglo American, its parent, is expected to release a review of the platinum business amid concerns about spiralling costs – fuelled by rises in electricity prices and salary increases in South Africa – when platinum prices have been hit by the European debt crisis.
The review, which Anglo has said will be released this week, has led to speculation that Amplats could look to close some of its older shafts in the Rustenburg area, which are deep and expensive to mine, and which have been operating on tight margins or have been lossmaking for two years.
The Rustenburg mines account for about a quarter of Amplats’ total production and they were at the heart of the more than six-week long industrial strife that knocked out about 40 per cent of its operations.
The review was initiated early last year, long before the industrial strife erupted in South Africa’s platinum and gold sectors, but the strikes and worker militancy is likely to influence Amplats’ thinking amid concerns about the stability of labour relations in South Africa, which is home to about 80 per cent of the world’s proven platinum reserves.
“The expected decrease in headline earnings per share is primarily due to lower sales volumes and lower realised prices during 2012. Platinum sales volumes for the period were lower primarily due to the two-month illegal industrial action experienced during the second half of 2012,” Amplats said.
“As a result of the illegal industrial action, the initial safety suspension and the ramp-up period, which commenced November 16 2012, total lost equivalent refined platinum production, including from joint ventures and associates, amounted to 306,000 ounces.”
The unrest in South Africa’s mining sector began when rock drill operators working for Lonmin, the London-listed platinum miner, went on strike demanding higher wages in August. It escalated after police shot and killed 34 protesters near Lonmin’s mine complex in Marikana, and spread across the platinum and gold sectors.
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