JOHANNESBURG (miningweekly.com) – JSE-listed platinum producer Anglo American Platinum (Amplats) was set to embark on a restructuring programme after a year-long review of its operations revealed a number of unsustainable operations.
The group, which announced the results of its review on Tuesday, said it would reconfigure its Rustenburg operations into three mines – with processing operations – and sell off its Union mines “at the right time” to maximise value under different ownership.
“The platinum business has attractive underlying fundamentals, but we are facing tough decisions to restore profitability to our operations. We must evolve to align the business with our expectations of the platinum market’s long-term dynamics and address the structural changes that have eroded profitability over time,” said Amplats CEO Chris Griffith.
Amplats proposed reducing production at its Rustenburg operations to between 320 000 oz and 350 000 oz across three operating mines, while placing its unsustainable, high-cost Khuseleka 1 and 2 shafts and Khomanani 1 and 2 shafts onto long-term care and maintenance.
Griffith said this would drop the company’s production by about 400 000 oz/y with a baseline production target of 2.1-million to 2.3-million ounces a year.
The group would also consider whether or not to shut down its Waterval UG2 concentrator and No 2 smelting furnace as it aligned its processing operations to the restructured operations.
Meanwhile, Amplats said it would halt mining activities at the Union North Declines, combine the Union North and South shafts into one operation and place the Mortimer Merensky concentrator on long-term care and maintenance as it prepares to sell the operations.
The company believed new owners could derive greater value from the operations.
Another proposal included cutting back on about 25% of capital expansion expenditure over the next ten years, falling to R100-billion and shifting investments to low-cost, high-margin projects.
The efficiency and cost reduction initiatives were expected to deliver benefits equal to R3.8-billion, including savings of R390-million a year from optimising its overhead structure.
Amplats, however, stated that it would attempt to create at least 14 000 new jobs through housing, infrastructure and small business development initiatives in Rustenburg to offset the number of possible job losses caused through restructuring.
“We have designed a comprehensive social plan to ensure we can compensate for any necessary labour restructuring and make a positive difference through job creation,” Griffith concluded.