Highlights:
- Committed to eliminating fatalities
- Regrettably, one colleague died in a fall-of-ground incident at Amandelbult
- Overall safety performance continues to improve
- Total recordable case frequency rate (TRFCR) improved by 4% to 2.40 per million hours worked
- Dedicated to the health and wellbeing of our employees and communities
- R500 million invested in Covid-19 initiatives at the workplace and in host communities, and R1.6 billion paid to employees during the lockdown and those who could not immediately return to work
- Making a difference for local communities
- Successful settlement of the Alchemy notional vendor financing, leading to the transfer of 1.4 million unencumbered shares to community development trusts
- PGM mine and refined production impacted by Covid-19 lockdowns and the temporary shutdowns of the ACP, with operations set up for a strong recovery in 2021
- Strong financial performance reported, underpinned by a 71% increase in the PGM basket price to R33,320 per ounce sold (2019: R19,534)
- Record EBITDA of R41.6 billion, a 39% increase
- Return on capital employed increased to 72% (2019: 58%)
- Net cash position of R18.7 billion (including the customer prepayment) (2019: R17.3 billion)
- Final dividend declared of R35.35 per share, or R9.4 billion, based on a payout ratio of 40% of headline earnings
Anglo American Platinum today reports a robust set of financial results, underpinned by high prices for its metals. At the same time, our operations are well-positioned for a strong recovery after facing significant headwinds in 2020.
Natascha Viljoen, CEO of Anglo American Platinum, commented:
“2020 has been a devastating year for many who have lost loved ones to Covid-19, and we pay our respects to victims of the virus on behalf of everyone at Anglo American Platinum. From a safety perspective, we let ourselves down this year. We regrettably lost our colleague Lindile Manzingi, a 56-year-old mining team supervisor, in a fall of ground incident on 3 September at Amandelbult mine.
I am also deeply saddened by the loss of three of our colleagues at our joint operations – João Silindane at Kroondal, and Johannes Mahlalela and Dennis Mdaka at Modikwa. Work-related fatalities are never acceptable, and we continue to focus on implementing safety improvements to ensure we eliminate fatalities and create a safe work environment for our employees. We extend our deepest condolences to their families, friends and colleagues.
The pandemic has posed incredible challenges on many fronts. The mining industry has, however, played a leading role in limiting the disastrous health and economic impact of the virus.
Anglo American Platinum is well equipped to manage safety and health risks supported by our robust health management systems, which enabled us to adapt quickly and restart operations. By doing so and recognising our role as the economic engine in many areas, we have been able to continue paying employees and suppliers, and carry on our extensive support to our host communities – allowing us to make a significant contribution to the economic recovery of the countries in which we operate. We are particularly proud of the support we have given to our employees and communities during the pandemic, with more than R500 million spent on Covid-19 initiatives, and R1.6 billion paid to employees who could not work due to lockdown regulations or underlying health issues.
We believe the industry will continue to play an essential role in safeguarding lives and livelihoods during the pandemic. This includes the role we can play to assist in the roll-out of Covid-19 vaccines through both our logistical capabilities and existing health infrastructure. Our engagements with governments and other stakeholders continue in this regard.”
Operationally, total PGM production (expressed as platinum, palladium, rhodium, gold, iridium and ruthenium metal in concentrate, including joint ventures and third-party purchases) declined by 14% year-on-year to 3,808,900 ounces, mainly due to the impact of Covid-19 lockdowns in South Africa and Zimbabwe. To ensure a continued focus on safety in response to the impact of Covid-19, internal stoppages were implemented. Despite these additional protocols, the Company had a strong recovery in H2 2020, with own mines production up 1% against H2 2019 (normalising for the sections at Amandelbult that came to their end of life of mine).
Total refined production, excluding tolling, declined by 42% to 2,713,100 ounces, as the temporary closure of the ACP impacted refined production. The repair of the ACP Phase A unit was successfully completed by 24 November, ahead of schedule and within budget. Capital expenditure on the Phase A plant amounted to R500 million and was partially offset by insurance proceeds of R351 million. The ACP Phase B unit is now undergoing its full rebuild that is scheduled to be completed in the second half of 2021, at an estimated capital cost of R550-R600 million.
As a result of the ACP process interruptions, there was a build-up of work-in-progress inventory of around 1 million PGM ounces. It is expected that this build-up in inventory will be released by the end of 2022.
In line with the 14% decrease in mining production, the unit cost of production per PGM ounce increased by 15% to R11,739 (2019: R10,189). Excluding the costs associated with unproductive labour amounting to R1.6 billion, or R607 per ounce, unit costs would have been R11,132, or 9% higher than 2019.
PGM prices were strong in 2020. In US dollar terms, the average achieved basket price increased by 51% year-on-year to $2,035 per PGM ounce (2019: $1,347 per ounce), helped particularly by a strong rhodium price. The rand weakened against the dollar during the year, leading to the rand basket price rising by 71% to R33,320 per PGM ounce (2019: R19,534 per ounce). Net sales revenue increased by 38% to R137.8 billion (2019: R99.6 billion), mainly due to an improvement in PGM prices and higher sales from trading activities mitigating the supply disruption to customers following the temporary closure of the ACP.
The Company delivered record EBITDA of R41.6 billion, an increase of 39% from 2019, an improvement in ROCE to 72%, and a net cash position of R18.7 billion.
Considering the strength of the balance sheet, the support provided to employees and communities to limit the impact of Covid-19, and the discretionary capital options available, the Board has declared a final dividend of R35.35 per share, or R9.4 billion, in line with the policy to pay out 40% of headline earnings.
Outlook
PGM production guidance (metal-in-concentrate) is expected to return to pre-Covid-19 levels of between 4.2 and 4.6 million ounces in 2021, while refined production is expected to reach 4.6 – 5 million ounces. PGM sales volumes are forecast to be in line with refined production.
Unit cost guidance for 2021 is between R11,000 and R11,500 per PGM ounce.
Total capital expenditure guidance, excluding capitalised waste stripping, is expected to be between R7.0 and R7.5 billion. Capitalised waste-stripping guidance is between R2.8 and R3.1 billion.
The supply and demand for PGMs are both forecast to rise in 2021 compared to 2020. This was always likely as both have already improved significantly since the first half of 2020, mainly owing to the world learning to live with Covid-19. The roll-out of effective vaccines now suggests further upside, though how soon they bring the promise of ‘normality’ will vary by country and sector and, in some cases, ‘normality’ will be different than it was before the pandemic. We expect palladium and rhodium to remain in deficit this year. Platinum is forecast to be in a small surplus.
“Looking ahead, we are building on our strong foundation of an unmatched portfolio of world-class assets, using our capabilities to implement world-class operational performance, technological advancements, digitalisation and a broader innovative mindset to drive further performance improvements. We believe the precious metals we mine will play an increasingly important role in enabling a low carbon economy, and we continue to invest in a wide range of efforts to develop and commercialise new applications for those metals. Our strategic focus is on extracting every economic ounce of metal from the orebodies we have been entrusted to mine, with minimal environmental impact, and to the optimal benefit of our employees, host communities, governments, and our shareholders,” concluded Viljoen.
Discover more information in our Annual Results Booklet.