ANGLO American would conduct a review of its majority-owned subsidiary, Anglo American Platinum (Amplats), Anglo CE Cynthia Carroll said on Friday, as the market speculated about a possible exit from an operation that has been hard hit by safety stoppages and lost output.

Anglo holds 80% of Amplats, the world's largest platinum producer, and for years the question has been asked when it will buy out minorities to take full control of the business.

That view has now swung to the other end of the spectrum, with the Financial Times reporting on market talk that Anglo could spin off the business.

On Friday, Ms Carroll said the platinum business was not matching the production, productivity and safety levels of earlier years, and returns had been declining in recent years, an unacceptable development for Anglo in the medium and longer term.

"As a result, we are embarking on a review to assess the optimal configuration of the platinum portfolio," Ms Carroll said at a results presentation. "We will do this with a single purpose in mind : maximising shareholder value and returns through the cycle."

Ms Carroll chairs the Amplats board.

"We have also made clear that we are prepared to take the tough decisions where assets are not delivering acceptable returns," she said. On a media call, when asked about talk of Anglo selling the business, she said the review would look at "the size and shape of the platinum business and how we can fundamentally shift it and return it to the sort of returns we had in 2008".

"We will look at where we should be targeting and focusing our efforts. Where we are getting the best efficiencies, how much we should be recycling, and how much we should be driving the downstream business.

"We are not going to complete the work in identifying how we take the business further until the latter part of this year."

A London-based analyst, Des Kilalea from RBC Capital Markets, says Ms Carroll has not specifically ruled out a sale or spinning off the business.

"It is very much a case of all options being on the table at this point." Among the options could be asset sales, reviewing the power-hungry processing division, self-generation of electricity and a greater focus on lower-cost operations.

However, Anglo is unlikely to sell the asset, he says, because it would be seen as an "unpatriotic" development, which could lead to a backlash of sorts against Anglo's other businesses in SA, including the highly profitable iron ore and thermal coal operations.

Amplats's contribution to Anglo's profit nudged down to 8% last year from 9% a year earlier. Of the 17 deaths within the group last year, 12 were at Amplats.

SA's platinum industry, which supplies about 80% of the world's platinum requirements, has been hit hard by increased safety stoppages and rising labour and electricity costs. Labour unrest is also prevalent. Amplats lowered its production forecast for this year, from 2,7-million ounces to between 2,5-million and 2,7-million ounces. Ms Carroll said Anglo estimated the sector had lost 300000oz to safety stoppages.

Mining companies reported a marked increase in government-ordered stoppages during the fourth quarter of last year, including shutdowns of entire mines for a broader range of issues where in some cases the problems were localised and could be addressed without stopping operations.

seccombea@bdfm.co.za