Anglo Platinum's Profit Plunges Amid Lower PGM Prices

Anglo American Platinum (Amplats), the world's largest producer of platinum group metals (PGMs), has reported a significant decline in profits for 2023, with earnings falling by up to 52% due to lower prices. The company's financial results reflect the weakness in the macro-economic environment and lower PGM prices, with EBITDA down 67% to R24 billion compared to the previous year. The main driver of this decline was a 35% decrease in the PGM dollar basket price, most notably for palladium and rhodium.

The lower prices also impacted the purchase of concentrate inventory measurement, resulting in a R10 billion increase in cost of sales compared to 2022. These headwinds were partially mitigated by a 2% increase in sales volumes. Despite the challenging operating environment, Amplats delivered stable production and achieved a record safety performance, with no work-related fatalities at managed operations for two consecutive years and a record-low total recordable case frequency rate (TRCFR) of 1.61 per one million hours worked.

Amplats' strong focus on sustainability was further operationalised through public-private partnerships and collaborations to support infrastructure delivery, including inputting into South Africa's National Energy Crisis Committee (NECOM) that focuses on the expedited implementation of the Presidential Energy Action Plan. The company also made a significant contribution of R85 billion to broader society, distributing value to stakeholders.

To mitigate the effects of lower PGM prices, Amplats is implementing several strategies, such as cost reductions, higher sales, restructuring, all-in sustaining cost (AISC) reduction, and maintaining a strong net cash position. The company is on track to meet its R10 billion capital expenditure and cost out target for 2024, with R4.7 billion of savings in H1 2024. Of these savings, R2.9 billion were operating costs and R1.8 billion were stay-in business capital.

In conclusion, Anglo American Platinum's profit fell by up to 52% in 2023 due to lower PGM prices. Despite the challenging operating environment, the company delivered stable production and achieved a record safety performance. Amplats is implementing various strategies to mitigate the impact of lower PGM prices and maintain its competitive position in the long term.