Anglo American boss Duncan Wanblad has made the case for the group’s platinum business, which it is in the process of demerging as part of the simplification of its portfolio, saying the hype about battery electric vehicles (BEVs) will die down.
Wanblad, in a virtual address to the Junior Mining Indaba held in Johannesburg on Thursday, said Anglo American Platinum (Amplats) will thrive as a stand-alone company, highlighting the prospects of the Mogalakwena mine, in the platinum group metals (PGMs) rich bushveld complex.
“And despite the current cyclical downturn, the PGM industry will continue to generate attractive returns, especially for Anglo American Platinum as a truly leading producer. BEVs are not the nirvana that some would have you believe, and hybrid vehicles are expected to become the more realistic option in many markets, remembering that hybrid cars generally have higher PGM loadings than [internal combustion engine] vehicles,” he said.
“While there is undoubtedly a very strong upside potential, both asset-driven and market-driven in Anglo American Platinum, it has become increasingly clear that keeping the business within our portfolio risks its full value potential not being realised or recognised.
“As a stand-alone PGM champion, Anglo American Platinum can set its priorities to deliver that full potential and will provide Anglo American’s shareholders and a wider range of existing and new Amplats shareholders with the flexibility to invest directly in the PGMs business — as opposed to making the investment through Anglo American.”
Substantial longevity
The recent tapering in growth of electric vehicle (EV) sales and a surge in demand for hybrid cars, which need catalytic converters to curb pollution, have given PGMs a new lease of life.
PGM producer Sibanye-Stillwater in April said its view was that PGMs have substantial longevity in automotive applications, especially through the emergence of hybrid vehicles.
The developing hydrogen economy is also likely to support demand for PGMs in future, with the European Commission having recently announced about €7bn in funding for more than 30 hydrogen projects.
The World Platinum Investment Council said the relevance of platinum’s growing role in the hydrogen economy remains as strong as before.
Platinum is used in hydrogen electrolysers, which are key in deriving hydrogen’s zero-emission applications, by using the proton exchange membrane process.
Amplats CEO Craig Miller said there were early signs of recovery in the PGM sector.
Miller said that while growth in BEVs continued to pose a threat to the PGM sector, the sales momentum is stalling, as concerns about charging infrastructure, potential subsidy reductions and second-hand prices of BEV cars weigh on demand — forcing carmakers to cut back or delay EV production. In contrast, hybrids and plug-in hybrids, which are seen as transitional technologies, are “proving more competitive than expected”, boosting the outlook for PGMs demand.
Outpacing growth
In the first half of this year hybrid vehicles, which contain PGM catalytic converters, increased 2% in market share, in line with a steady rise in demand. Growth in the market share of BEVs stalled, increasing by only half a percentage point. Additionally, in China plug-in hybrids and range-extender EVs outpaced the market share growth of BEVs last year and this year.
“There are many factors across the world pointing to greater demand for internal combustion engines and various forms of hybrid vehicles,” said Miller, “as many of the largest automakers have continued to change their drivetrain strategies in recent months — responding to consumer demands in tune with what we’ve been saying for some time.”
The London-based Anglo last month kick-started a process to demerge Amplats, raising R7.2bn in an accelerated bookbuild process for 13.9-million shares representing 5.3% of Amplats, the world’s biggest platinum producer.
Wanblad has had to fend off two bids from bigger rival BHP. The approach by BHP caused Anglo to speed up its asset review process, in which it announced plans to let go of Amplats and De Beers.
BHP was mainly after Anglo’s copper assets, with its bid for Anglo excluding Amplats and Kumba.
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