JOHANNESBURG (miningweekly.com) – Strike-hit platinum company Anglo American Platinum (Amplats) is targeting cost reductions and productivity improvements of R3.8-billion by 2016 as it transitions to a lower cost, higher quality portfolio.

Amplats told mining analysts who visited the company’s Polokwane smelter on Friday that the company would be growing its openpit operations and leveraging its mechanised mines, as well as implementing short-, medium- and long-term marketing strategies to boost the sales of platinum-group metals (PGMs) across a wide spectrum.

Participation in the recycling business, where the 2013 return on capital employed was 43%, was under investigation, the company disclosed.

Programmes to drive demand included improving the rate of fuel cell adoption, stimulating rhodium demand for autocatalysts and expanding the gifting of platinum jewellery to both the bride and the groom in India.

Mines earmarked for growth were the Mogalakwena, Unki, Twickenham, Tumela, Dishaba and Der Brochen operations together with the Bafokeng Rasimone, Mototolo, Modikwa and Kroondal joint ventures (JVs).

Mines that would be exited were the Union and Rustenburg underground operations as well as the Bokoni and Pandora JVs.

Discussion was under way to extend the mechanised Mototolo JV into Der Brochen and to boost the pool-and-share arrangement at the mechanised Kroondal platinum mine through the contribution of farms.

Amplats CEO Chris Griffith told analysts that the current focus was to create a more profitable, sustainable and socially acceptable company.

The north and south divisions of the Union mine had already been consolidated into one operation, the north declines closed and a cash positive mine with a 25-year potential created, using existing infrastructure.

The Merensky concentrator has been placed on care and maintenance and the Rustenburg mine prepared to operate on a standalone basis.

Interest in buying both Union and Rustenburg would be evaluated this month in tandem with the possible demerging of the mines into a separately listed entity.

The company said that structural changes of falling demand, rising supply and increasing costs were impacting the business.

Against a background of falling European gross domestic product, original-equipment manufacturers were substituting platinum and thrifting rhodium.

Recycling’s contribution had quadrupled, putting two-million ounces of platinum into the market a year, compared with only 500 000 oz previously, and while costs had risen by 14% a year since 2000, prices had remained flat for the last five years.

Executive marketing head Andrew Hinkly told analysts that the company had built relationships with new customers in 2014 and expected the upward trend to continue into 2015.

This year would also see the expiry of the last discounted contracts for both platinum and palladium as well as increased revenue and profit from minor metals like iridium and ruthenium, beyond the 2013 level of $103-million.

PGM investment activities were continuing in the fields of water treatment, medical devices, recycling, electronics and electrochemical systems in partnership with companies including Altergy Systems through Clean Tech and Ballard Power Systems for proton exchange membrane (PEM) fuel cells globally; Clean Energy for PEM fuel cells in sub-Saharan Africa; Primus Power for battery storage; Food Freshness Technology for food freshness and Hydrogen Technologies for hydrogen storage.

The total marketing portfolio had a carrying value of $43.7-million for an outlay of $28.6-million, showed a pretax gain of $15.1-million as at September 15, and was under way at an internal rate of return of 38%.

The $10-million committed to Primus Power for the commercialisation of the grid-scale redox flow battery represented a major potential source of demand for PGMs.