Anglo American Platinum is facing challenges amid lower prices, rising costs, and an uncertain future. As a result, the company has announced a potential restructuring that could lead to the loss of approximately 3,700 jobs.
Impact on South African Operations
The restructuring will not only affect jobs within Anglo American Platinum’s South African operations but also impact around 620 service providers and contractors. The final number of job cuts will be determined after the consultation process is complete.
Precious Metals Sector Under Pressure
This move by Anglo American Platinum follows a trend in the precious metals sector, with peer companies like Sibanye-Stillwater also announcing similar measures. The decline in prices for metals like palladium and rhodium has played a significant role in this decision, with prices dropping by 36% and 58% respectively over the past year.
Price Pressures and Strategic Decisions
The company reported that the platinum group metals (PGM) dollar basket price per ounce sold is currently at its lowest point since 2019, primarily due to the decrease in palladium and rhodium prices. With 31,668 employees, including contractors, as of the end of 2023, Anglo American Platinum aims to take necessary actions to ensure its long-term sustainability and competitive edge.
“Suppressed PGM prices, coupled with significant cost pressures and an uncertain outlook, require further intervention to ensure the long-term sustainability and competitive position of our operations,” stated Chief Executive Craig Miller.
Restructuring Operations Amid Market Uncertainty
In a strategic move to address market volatility and reduce costs, Sibanye-Stillwater announced plans to restructure its U.S. operations. This decision was driven by the lower palladium price environment, prompting the company to make operational and capital adjustments.
Cost-Saving Measures for Sustainable Growth
Following suit, Anglo American revealed its strategy to lower production by 2024 as part of a broader initiative to save $1 billion. The company aims to cut $1.8 billion in capital expenditure from 2023 to 2026, demonstrating a proactive approach to managing financial resources.
Outlook on PGMs and Sustainable Development
Despite the challenges, there remains optimism about the long-term demand for the Platinum Group Metals (PGMs). These metals play a crucial role in advancing towards a greener future, highlighting their importance in sustainable development.
Financial Performance Overview
In 2023, Sibanye-Stillwater reported a decrease in adjusted earnings before interest, taxes, depreciation, and amortization to ZAR24.4 billion ($1.29 billion) from ZAR73.9 billion in the previous year. Revenue also saw a decline to ZAR124.6 billion compared to ZAR164.1 billion in 2022.
Dividend Declaration
The company declared a dividend of ZAR21.30 per share for 2023, marking a decrease from the ZAR115 payout in the previous year. This decision reflects the company’s prudent financial management in a challenging economic environment.