ANGLO AMERICAN PLATINUM LIMITED I am particularly proud of the important work we have been doing to support our employees and host communities during the Covid-19 pandemic. The strength of our business has supported our ability to continue paying employees throughout the lockdown, with R1.2 billion paid on salaries and benefits to employees not working during lockdown and those not able to return to work. In addition, we have invested R250 million until the end of June in Covid-19 measures in the workplace and our host communities.
Despite the challenges and safety risks brought about by shutting down and restarting operations, we have reported our best-ever safety performance in the past six months, with own-managed operations running without a fatal incident for an unprecedented consecutive 620 days until the end of June. However, we are deeply saddened to have lost one of our colleagues, Mr Joao Silindane, in a fall-of-ground incident at Kroondal, a non-managed joint venture operation. Our sincere condolences go out to his family, friends and colleagues.'
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 25% year-on-year in the first half to 1,619,900 ounces, mainly due to the impact of Covid-19 lockdowns in
Total refined production, including tolling, declined by 46% to 1,246,900 ounces, as the temporary closure of the ACP and load-shedding in the first quarter impacted production. Work is well under way to repair Phase A of the ACP, which is expected to be completed by the year-end. A cautious approach has been taken with the ongoing operation of the Phase B unit during this period, with increased monitoring likely to result in intermittent stoppages to inspect the plant until the repairs to Phase A are completed.
As a result of the ACP process interruptions, there was a build-up of work-in-progress inventory of around 500,000 PGM ounces. It is expected that approximately 45% of this build-up in inventory will be released in the second half of 2020.
In line with the 25% decrease in mining production, the unit cost of production per PGM ounce increased by 26% to R12,555 (H1 2019: R9,951). Excluding the costs associated with unproductive labour amounting to R1.2 billion, or R1,057 per ounce, unit costs would have been R11,498, or 16% higher than H1 2019.
PGM prices were volatile as the Covid-19 pandemic hit both the demand and supply sides of the PGM markets. In dollar terms, the average realised basket price was 56% higher year-on-year at
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 an interim dividend of R10.23 per share, or R2.8 billion, in line with the policy to pay out 40% of headline earnings.
On recommendation from the Nominations Committee, the Board approved the appointment of Thabi Leoka and
Outlook
PGM production guidance (metal-in-concentrate) is between 3.1- 3.6 million PGM ounces for 2020, with refined production and sales volumes expected to be in the same range.
While the early stages of recovery are under way in many geographic regions, there remains a great deal of uncertainty, with limited visibility beyond a few months. Mine supply is expected to be sharply lower this year due to the impact of Covid-19, while global recycling volumes are expected to be less affected. PGM demand will be impacted by the decline in global car and commercial vehicle sales and production, weaker sales of platinum jewellery, and softer industrial demand. Despite the impact on demand, we expect platinum, palladium and rhodium to remain in deficit this year. Longer-term, the Company remains committed to expanding the role PGMs can play in enabling a lower carbon economy and we continue to lead the industry's demand creation efforts across the industrial, investment and jewellery demand segments.
'The long-term fundamentals for our suite of precious metals are strong, and we will continue investing to deliver value for all our stakeholders through the cycle. While the Covid-19 pandemic has required significant effort to keep our employees safe, as well as ensure that operations continue, we are focused on progressing the next stage of value delivery. Our focus is on implementing technological improvements and innovation across our operations to meet and exceed the world benchmarks for operational excellence and investing in high-returning projects while studying potential growth and replacement options at Mogalakwena and Mototolo/Der Brochen. We also continue to leverage our market development efforts,' concluded Viljoen.
Contact:
Tel: +27 (0) 11 373 6239
Email: emma.chapman@angloamerican.com
Notes to editors
Anglo American is a leading global mining company and our products are the essential ingredients in almost every aspect of modern life. Our portfolio of world-class competitive mining operations and undeveloped resources provides the metals and minerals that enable a cleaner, more electrified world and that meet the fast growing consumer-driven demands of the world's developed and maturing economies. With our people at the heart of our business, we use innovative practices and the latest technologies to discover new resources and mine, process, move and market our products to our customers around the world - safely, responsibly and sustainably.
As a responsible miner of diamonds (through De Beers), copper, platinum group metals, iron ore, coal, nickel and manganese we are the custodians of what are precious natural resources. We work together with our business partners and diverse stakeholders to unlock the sustainable value that those resources represent for our shareholders, the communities and countries in which we operate, and for society as a whole. Anglo American is re-imagining mining to improve people's lives.
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