Anglo American Platinum (Amplats), set to be renamed Valterra Platinum before its imminent demerger from the Anglo group, says it is likely to incur “significant” one-off set-up costs to operate independently.
In its annual report published on Thursday, the company said some of the risks associated with its break-up from Anglo American is that some or all of the anticipated benefits of the demerger may not be realised.
It also said that the stand-alone outfit “will not be able to rely on certain existing sources to fund its future capital requirements and financing from new sources may be available on less favourable terms”.
However, the company, led by Graig Miller, said it has had “extensive” engagements with SA and offshore banks that have expressed “strong interest” in supporting the stand-alone business.
“More broadly, our disciplined capital allocation framework will remain unchanged — investing in the business to support sustainable returns and maintaining an earnings-based dividend of 40%,” the company said.
“Any additional value created will either be invested into discretionary capital when appropriate or returned to shareholders in the form of additional dividends or share buybacks,” it said.
The demerger is set to be completed by June as Anglo simplifies its portfolio and turns its back on platinum group metals (PGM), diamonds, metallurgical coal and nickel — with copper its most prized commodity going forward.
Despite the costs associated with the break-up, Amplats executives believe a stand-alone entity will thrive, stating it has worked with Anglo American Plc to ensure it has all the capabilities in place as a fully independent company.
“The demerger provides us with the opportunity to create an efficient independent capital structure, consistent with our ongoing commitment to maintain a strong balance sheet, able to deliver our strategic priorities and allow shareholders to participate in ongoing value creation,” Amplats said.
“We intend to maintain a resilient balance sheet with leverage at less than one times net debt to earnings before interest, tax, depreciation and amortisation (ebitda) through the cycle.
“Our opening capital structure and this policy going forward will allow us to deliver on our strategy through a range of possible PGM market scenarios and so absorb near-term market volatility,” it said.
Amplats, whose history stretches back 80 years, has reconfigured its management to make the postdemerger organisation fit for purpose.
It said the changes to its executive committee were meant to address business challenges, streamline roles and enhance strategic alignment.
To this end, several executives stepped down as part of the restructuring.
These include former COO Riaan Blignaut, who has joined former Amplats CEO Natascha Viljoen at mining behemoth Newmont Corporation, where he is head of asset management.
Another executive who has exited Amplats is Sicelo Ntuli, executive head for safety, health, environment.
Wade Bickley, executive head of mining & technical, and Prakashim Moodliar, executive head of projects, have also stepped down from their roles.
“The change aims to refine the organisation by concentrating on simplicity, clarity and operational efficiency, with a focus on strong expertise in mining and processing.
“The structure emphasises a local operational presence in SA and brings previously regional and group functions directly under Anglo American Platinum to avoid redundancy,” the company said.
The company will retain its primary listing in Joburg post the demerger and seek a secondary listing in London.
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