ANGLO American Platinum (Amplats), reporting an unprecedented loss on Monday, urged its workforce to recognise the enormous damage caused by a two-month, illegal strike and commit to not downing tools this year.
Its net debt grew by R6.8bn to R10.5bn last year and it reported a headline loss of R1.47bn — a fall of 141% from a year ago. Amplats is not paying a dividend.
The dramatic reversal in its financial health stemmed largely from the unprotected strikes at its Rustenburg, Union and Amandelbult mines late last year.
As a result of the strikes, its platinum output fell 8% to 2.2-million ounces.
There were lengthy strikes at other platinum mines and South Africa’s largest gold mines last year as workers defied the leadership of the National Union of Mineworkers (NUM) and downed tools in pursuit of their demands, which included higher wages.
"We certainly don’t foresee the kind of situation we saw last year. We are hoping that all stakeholders will realise that this has caused massive damage to all companies," Amplats CEO Chris Griffith said on Monday.
"For our company, this is its first (annual) loss in its history. This is very serious and we hope all stakeholders will act with reticence before contemplating industrial action again this year."
Mineral Resources Minister Susan Shabangu said last week that Amplats was a "child" that had been brought back into line when it announced it was postponing plans to retrench 14,000 workers while it holds talks with the government and labour.
"When the minister accuse s you of being children it’s very difficult for investors to stomach that kind of thing," JP Morgan Cazenove analyst Steve Shepherd said at the results presentation.
There were high levels of tension between the NUM and the Association of Mineworkers and Construction Union, with the latter claiming that it represented 26,000 workers, about half of Amplats’ workforce.
The miner would update the market in a month on union representation at its operations, Mr Griffith said.
Amplats was not about to breach its debt covenants and had enough headroom in its debt facilities to restructure the company, finance director Bongani Nqwababa said yesterday. "In terms of our covenants, there is still colossal headroom between our covenants and where we are," he said, citing confidentiality clauses for not disclosing details.
"We have no intention whatsover to further balloon the net debt level," Mr Nqwababa said. " A rights issue is not in our plans and we have no intention of going in that direction."
After a year-long review, Amplats last month unveiled a strategy to restore the business to profitability, which could entail idling four shafts, selling the Union mine and also retrenching part of its workforce.
It expects it will be able to redeploy about 4,200 affected workers at other Amplats and Anglo American assets. Anglo owns 80% of Amplats.
Expressions of interest have been received for the Union mine as well as Amplats’ stake in the Pandora joint venture, according to Mr Griffith.
One of the factors that pushed the company into a loss was the above-inflation cost increases at its operations.
Labour, which comprises 46% of the company’s costs, increased by 8.4% last year, while electricity, electrical components and diesel costs shot up 19% against an inflation rate of 6%.