Amplats earnings jump, warns against unsustainable wage hikes
Anglo American Platinum (Amplats) on Monday reported half-year earnings more than doubling, boosted by higher metals prices, but warned it could not give unsustainable increases as sector wage talks continued.
Higher prices for precious metals and a weaker rand currency have improved operating conditions for South African producers but the industry is still reeling from a 2014 strike that cost billions and forced firms to cut jobs and shed mines after a supply glut weighed on platinum prices.
“Having just come out of a very difficult environment over the last couple of years … the industry has to be really careful about embedding unsustainable increases in the base wages,” CEO Chris Griffith said.
The price of platinum has risen 7.1% in 2019 setting the metal on course for its biggest gain in seven years.
The majority union in the platinum sector, the Association of Mineworkers and Construction Union (AMCU), has demanded a hike of 17,000 rand ($1,145) per month, or around 48%.
“We would really have to look at what inflation is and around inflation is what we would still seek the wage settlement to be,” said Griffith, declined to give a number.
Amplats, which has not yet presented its offer to the unions, said if the costs were too high it could hit jobs and production.
“If we would have to agree to increases like that then basically you would kill the production at Amandelbult and thousands of people would be without work,” Griffith said.
For the half year to June 30 Amplats reported a 120% rise in headline earnings per share, South Africa’s main profit measure, to 28.15 rand ($2.02) per share from 12.82 rand a year earlier.
It benefited from higher metals prices and a stock gain of 1 billion rand.
“We’ve seen steady production from our operations, though certain headwinds, including Eskom power shortages and strike action at Mototolo, have impacted our first half performance but we expect to see a stronger performance in H2 2019,” Griffith said.
Eskom cut power across the country in February and March as low coal supplies, a cash crunch, and multiple failures at its ageing power stations curbed supply.
The precious metals producer, which only resumed dividend payments in February 2018 after a seven-year absence, hiked its interim dividend to 11 rand per share compared with 3.74 rand for the same period a year earlier.
($1 = 13.9313 rand)
(By Tanisha Heiberg and Helen Reid; Editing by Louise Heavens and Jason Neely)