Anglo American’s (LON:AAL) platinum unit, Amplats, is a step closer to selling its mines in South Africa as a now three-month strike over pay in the sector has forced the firm to dig into reserves, hitting its bottom line.
In an interview with Business Day, chief executive officer Mark Cutifani said the Rustenburg operations were no longer considered one of the company’s core assets.
“I don’t think [our operations in South Africa’s platinum belt] is where our best skills set sits. That’s why I’ve been quite vocal saying we should consider taking a back step from Rustenburg,” he was quoted as saying.
While the region holds the world’s largest platinum deposits, the mines are labour-intensive and often deep, making mechanization costly and politically fraught, added Cutifani.
About 80,000 miners are on strike and have vowed not to return to the shafts until their minimum monthly wage is doubled to around $1,200.
Anglo has repeatedly said that demand, if met, would wreck its platinum subsidiary.
Earlier this month Sibanye Gold (NYSE:SBGL), the country’s top gold producer, said it was considering the acquisition of some platinum mines once the strike is resolved.
Amplats and the two other top world’s platinum producers Impala Platinum (JSE:IMP) and Lonmin (LON:LMI) said in joint statement the ongoing strike in the platinum belt was “unprecedented,” and at a stage where some of its impacts are becoming irreparable. To date, they have lost over a billion dollars in revenue.
Amplats is still producing about 60% of its platinum capacity from a few mines not affected by the strikes.
South Africa, Africa’s largest economy, holds about 80% of the world’s known platinum reserves, accounting for about 70% of global output, used for jewellery, catalytic converters in vehicles, and as a key source of hard currency for the country, among other applications.