Anglo American Platinum (Amplats) is eyeing a secondary listing on the London Stock Exchange (LSE) to deepen its liquidity as it prepares for its separation next year from parent company Anglo American.
CEO Craig Miller told Business Day that the company wants to broaden its investor base and attract international shareholders, particularly those who prefer UK-listed entities.
The potential listing is expected to enhance Amplats’ visibility and credibility in global markets, providing the company with financial flexibility.
The company aims to mitigate potential risks of capital outflow as it transitions from the umbrella of Anglo to being a stand-alone.
The secondary listing will not only broaden access to capital but also enhance the company’s visibility and credibility in global markets, Miller said.
Facing a takeover bid from BHP, Anglo American made the decision in May to divest or demerge from its platinum, steelmaking coal, and diamond businesses. This bold move, the company’s largest in a generation, is designed to satisfy shareholders and reshape its business portfolio.
The group plans to demerge Amplats “in a responsible and orderly way” to optimise value for both Anglo and Amplats’ shareholders.
Anglo owns nearly 80% of Amplats. Most of the world’s biggest mining companies are listed in London because British high street and investment banks, pension funds plough hundreds of millions of pounds a year in mining projects.
Another drawcard for the industry is that the sector’s key lobbying group, the International Council on Mining and Metals is based in the city, together with the leading precious metals trader, the London Bullion Market Association.
Aeon Investment Management chief investment officer Asief Mohamed said the main reason why Amplats wants to list on the LSE is because an unbundling from Anglo American Plc will facilitate the holding of the Amplats shares by the shareholders of Anglo American Plc.
“The LSE also has a rich history as a centre for financing mining companies. This translates to a large pool of investors with experience and interest in the mining sector, along with the financial resources to back those interests,” he said.
“The LSE also has a significant number of international companies listed, including many from mining geographies like Africa, South America, Russia, and Australia.”
Amplats’ demerger from Anglo is expected to net SA’s fiscus about R18bn in capital gains tax.
As Amplats transitions to an independent entity, it faces challenges such as plummeting platinum-group metal (PGM) prices and the associated impact on earnings, which have already led to restructuring and cost-cutting measures.
However, executives at Amplats are optimistic about the long-term PGM outlook.
“The outlook for PGMs is robust,” said Miller. “We are starting to see a slowdown in battery electric vehicle sales, but internal combustion engine and hybrid vehicle sales have increased by 7% in 2023 and a further 2% in the first half of this year. This points to increased demand for PGMs.”
Amplats, which is the world’s leading primary producer of PGMs, has already seen the departure of about 2,800 workers out of the 3,700 employees affected by the February cost-cutting measures, the group said on Monday.
The remaining employees are expected to exit in the second half of the year.
CFO Sayurie Naidoo said that the company has saved R4.7bn in the first half of the year, almost half of its target, which can be attributed to their operational cost and capital expenditure cost cutting strategy.
This included R2.9bn in operating costs and R1.8bn in stay-in-business capital. She said the company is on track to meet its R10bn target for the current year.
The company’s cost-out programme delivered R2.2bn in operational cost reductions, offsetting the impact of inflation. These reductions included R1.2bn in consumables, R700m in labour and contractor costs, and R300m in sundries.
Amplats reduced overhead and corporate costs by R600m, benefiting from corporate restructuring at the end of 2023. The cost of the restructuring, including separation packages, amounted to R1bn to date, with additional costs expected in the second half of 2024.
Despite the challenging market conditions, Amplats reported an earnings before interest, taxes, depreciation and amortisation (ebitda) mining margin of 28% and an ebitda of R12.3bn, down 8% year on year.
This reduction was driven by a 24% decrease in the PGM dollar basket price, one-off restructuring costs, and inflation, partially offset by cost reduction initiatives and higher sales volumes, the company said.
With Kabelo Khumalo
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