Anglo Platinum, the world’s biggest producer of the precious metal, would be able to achieve second-half revenues similar to that of the first half, if the platinum price were to average at $1 500/oz, CFO Norman Mbazima said on Monday.

This was as the miner aimed to significantly increase its production volumes for the period, coupled with a “big improvement” in unit costs, he told Mining Weekly Online.

The Anglo American division reported a revenue of R27,3-billion for the six months ended June 30, which was a 17% increase on the previous comparable figure, while unit cash costs ballooned by 46%.

Mbazima explained that much of the rocketing cost increases were owing to lower production levels, as Angloplat largely had a fixed-cost base.

“I would see a big improvement from the unit costs coming down, compared with the first half,” he said of the current half year. “Whilst there are still certain items where the escalations are large, in some of the major items, we have already halved those.”

“There will be some easing there,” he added.

The other wildcard factor that would play on Angloplat’s margins was the platinum price, which Mbazima described as “the big unknown”.

The price of the metal, used to reduce diesel engine emissions, had dived from levels near $2 100/oz at the beginning of July to $1 740/oz on July 24. For the six months ended June 30, the miner received an average price of $1 906/oz for its platinum.

But, even at the current lower levels, Mbazima said that the company would be able to grow its revenue.

“I was doing some maths before I came here, and I was seeing that, with the expectation of production that we’ve got, if we achieved a platinum price of about $1 500/oz, we would at least have the same revenue as [we had in the first half],” he illustrated. “That’s one way of looking at it.”

Volume-wise, Angloplat produced one-million ounces during the first half of the year, but new CEO Neville Nicolau said that the company was “in good position to achieve” its targeted 2,4-million ounces of platinum refined platinum for the full year. Volumes took a knock in the first half after the company’s key Amandelbult mine was flooded and it had problems with its processing operations. The Eskom crisis in January compounded this.

JEWELLERY DEMAND RETURNS

Mbazima declined to forecast what he saw the platinum price doing for the rest of the year, but commented that Angloplat would be happy for it to remain at current levels, as they were more attractive to the jewellery sector.

“We always said that the price was a lot higher than what it should be when it was around the $2 200/oz mark,” he said in an interview in Johannesburg. “So, we were comfortable for it to come down into the $1 700/oz to $1 800/oz levels.”

“We see jewellery coming back into the fold at those levels,” added Mbazima. “When we dipped below $2 000/oz recently, we actually saw an uptick of jewellery uptake of the metal.”

Demand from the jewellery sector was vulnerable to price fluctuations, and was often seen as a buffer to the tight supply/demand dynamics in the platinum market.