The electrification of the drivetrain continues to threaten the demand for platinum group metals (PGMs), putting pressure on SA miner Anglo American Platinum (Amplats).
Low prices and a high cost base saw the group cutting back on production and retrenching 3,700 employees last year and its ongoing demerger from Anglo American means more restructuring efforts are required in the coming months.
However, Amplats CEO Craig Miller is confident that as a stand-alone company, the group will extract more value from its SA PGM assets.
Business Day sat down with Miller to discuss the long-term case for PGMs, Amplats’ evolving investment case and positive developments in the SA mining landscape.
What is the long-term case for PGMs and do you expect their prices to improve meaningfully?
PGMs are used in a multitude of different applications. For example, platinum is not only used in catalytic converters, but in various industrial applications, medical treatment, jewellery and as an investment.
PGMs also have a role to play in the energy transition, particularly in the transport sector via hybrid vehicles and hydrogen fuel cell electric vehicles.
There’s a lot of global economic uncertainty weighing on PGM prices today but, after steep declines in 2023, they’ve been relatively stable for the past 12 months. If you look at the fundamentals in terms of supply and demand, we think that the anticipated deficits will materialise — there’s no reason prices should be where they are.
Last year Amplats announced thousands of retrenchments as it cut back production in response to stubbornly low PGM prices. Do you expect more production cuts and retrenchments this year?
No, we’ve set up the business in the past 12 months to deal with the current price environment. Clearly, if prices change materially downwards from here then we’ll need to respond, but that’s not unique to our business. As a mining company, we don’t just look at prices in the next six or 12 months; we take a longer-term view.
The latest restructuring is largely complete, as are the majority of the retrenchments we implemented in 2024, but we’re going through another one in anticipation of the demerger from Anglo American.
How far along is the process to demerge from Anglo American?
We’re on track for the demerger to be concluded around the middle of the year.
As we reconfigure the business to become a stand-alone company, certain activities need to move across from Anglo into our company and there are certain things we can now do more efficiently through outsourcing.
So, we’re going through a little bit of a restructuring process now, which will hopefully be completed by the end of February.
How will Amplats’ investment case be different as a stand-alone company?
It’s very much going to be a PGM producer. We’ve got fantastic assets at Mogalakwena, Mototolo and Amandelbult, and there’s more value we can extract from those assets. We’re going to be a lot more agile, direct and responsive as a stand-alone company, which will enable us to realise that value.
Our strategy is to leverage the assets we currently have and to be disciplined in terms of how we invest in future growth, and there are opportunities for that in our portfolio.
Being a stand-alone company enables us to invest back into the PGM business and that’s where our focus will be.
What is the mood in the boardroom when it comes to the government of national unity (GNU)?
I’m really encouraged by what we’re seeing coming out of the GNU. I don’t expect everybody to agree on everything all the time, but what I see coming out of the GNU is SA working together and trying to find amicable solutions to key issues.
I’m really encouraged that there has been a great deal of proactivity and a recognition that everybody is aligned around the government’s objectives of creating inclusive economic development and job creation. If we remain focused around that, we’ll continue to succeed.
From a mining perspective, when I speak to various investors and other international participants, they tend to agree that SA’s mining jurisdiction is relatively stable. We have a stable fiscal environment where tax rates, royalty rates and the way we can move funds around don’t change year on year.
The Mineral and Petroleum Resources Development Act also provides some operating stability. We know what the regulator expects of us and what we can expect of it, which creates a lot of the stability we require to make long-term investments.
Recognising that gives us a lot of assurance to continue to invest in our assets here in SA.
What about SA’s electricity and water supply? To what extent are they a threat to the business?
We had more than 300 days without load curtailment, and I’m really encouraged that Eskom, together with business, government and organised labour, were able to create that stability last year. It enabled us to refine a lot of our product which had built up in work in progress up until 2024.
We also recognise the opportunity for us to bring additional electricity supply to the market, and we’ve entered into a 20-year agreement with Envusa Energy which will look to supply around 30% of our operations’ needs with renewable energy.
We must continue with reforms to create ongoing stability and bring more renewables to the market.
Water is a challenge, but if I reflect on what we’ve done as business together with government, the regulator and water infrastructure providers, I think we can work together to address the country’s water requirements.
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