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Amplats to cut 400,000oz of production and 14,000 jobs

Publishing Date
15 Jan 2013 2:48pm GMT
Mining Journal
Anglo American Platinum Ltd (Amplats), controlled by Anglo American plc, will reduce its annual platinum production by 400,000oz and cut 14,000 jobs following a review of the business.

The platinum industry has been hit by oversupply, weak prices and reduced demand.

Amplats’s Rustenburg operations, which were blighted by strikes last year, will be reduced to three mines comprising five shafts, from its previous five mines and nine shafts. Two shafts at Khuseleka and Khomanani will be put on long-term care and maintenance, Amplats said.

The company’s processing operations will also be adapted, which may include closing the Waterval UG2 concentrator and No. 2 smelting furnace, Amplats said. These changes will result in 13,000 Rustenburg jobs being cut and sustainable production being reduced to 320,000-350,000oz/y. The operations produced 533,400oz platinum equivalent in 2011.

A further 1,000 jobs will also be lost from Amplats’ operations, however the company hopes to create as many jobs as it cuts, which will include redeployment in the wider Anglo American group, other mining companies and other sectors.

But broker Liberum Capital expressed doubt about the job prospects for redundant workers. “Amplats hopes to create 14,000 jobs to offset the (cuts), this looks very optimistic given the continuing levels high unemployment (25%) in the country,” said Liberum.

Amplats also plans to divest its Union mines at the right time. In the interim, it will combine the north and south operations into one and put the Mortimer Merensky concentrator on long-term care and maintenance.

The company aims to deliver R3.8 billion (US$434 million) of annual benefits by 2015 through cost reduction and efficiency improvements, including savings of R390 million through a redesign of the company’s overhead structure, Amplats said.

“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,” Chris Griffith, chief executive of Amplats, said.

On Monday, Amplats warned that it would make a loss for 2012 after losing more than 300,000oz of production due to the strikes.

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