Last updated: July 21, 2014 5:24 pm

Anglo American to shed platinum assets

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Miners at Lonmin's Karee mine in Marikana, Rustenburg©Reuters

Anglo American is to sell a major part of its platinum mining operations in South Africa, following the end of a five-month workers’ strike.

On Monday, the London-listed group – which is the world’s largest platinum miner – confirmed plans to divest its Rustenburg mines, in its largest portfolio shake-up under chief executive Mark Cutifani since he was appointed last year. Anglo said it also planned to dispose of its Union mine, which it has long been trying to sell, and named two other mines, both joint ventures, that “most likely do not fit the envisaged future portfolio”.

Anglo added that it was open to either a sale or a “public market exit” for its Rustenburg and Union mines which, together, employ about half of the 40,000-strong workforce of its Anglo Platinum subsidiary.

Anglo Platinum said: “Both management time and capital are finite. Therefore, the decision has been made to possibly exit certain assets that will be better placed in the hands of a new owner. There are a number of potential investors seeking access to the platinum industry and these are good long life assets with potential.”

Chris Griffith, chief executive of Anglo Platinum, explained that the company had “a number of suitors” for the mines, but said the sale process was still in its early stages.

One South African miner, Sibanye Gold, has already said it wants to move in to platinum.

Platinum mines around Rustenburg were at the heart of the strike led by the union Amcu, which concluded last month. During the five-month strike, Amplats’ production dropped 40 per cent compared with the same period last year, while headline earnings were down almost 90 per cent.

Anglo said on Monday that it would book a $1m loss from Amplats in its interim results, compared with a $92m contribution to underlying earnings in the same period last year.

Des Kilalea, an analyst at RBC Capital Markets, said a sale of the mines would be positive. “Poor returns from the [platinum] division have been a major drag on Anglo’s financial performance,” he said.

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Under Mr Cutifani, Anglo has repeatedly said it wants to shift resources towards more mechanised mining and away from Rustenburg’s labour intensive mines and the associated potential for strikes and labour unrest. Last year, it closed some of the shafts at Rustenburg, hitting 5,000 jobs.

Anglo has already been in talks with South African government officials to prepare the ground for a wider restructuring, which is likely to receive more support if the group can find a buyer for its mines that will keep most of the jobs – such as Sibanye.

Sibanye’s history is similar to that of Anglo Platinum, having been formed after Gold Fields spun off its main South African mines.

At Pandora, one of the joint venture mining projects that is under review, Anglo Platinum is partnered with a Lonmin subsidiary. The other, Bokoni, is controlled by South Africa’s Atlatsa Resources.

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