Valterra Platinum, which debuted on the JSE this week after shedding its Anglo American Platinum identity, will focus on fully exploiting the assets it already has rather than mull expansion, says CEO Craig Miller.
“Given the endowment, the scale of assets and the quality of assets that we have in the portfolio, our opportunity as Valterra Platinum is really to leverage the value out of our existing core assets,” he told reporters.
“We are not looking at expanding the number of assets in the portfolio, we need to look at creating the value that we have from our mining and processing assets. We have been clear that our strategy is focused on value vs volume.”
Potentially we can bring high-grade ore to the surface through the underground activities, and we can blend that with the existing open pit and have the potential to increase the number of ounces we produce; and once again we will do that only if it creates value and if there is a market for it
— Craig Miller, Valterra Platinum CEO
Miller said the company, with a market cap of about R190bn, was looking at exploring underground mining at Mogalakwena in Limpopo, the world’s largest open-pit platinum mine.
“Potentially we can bring high-grade ore to the surface through the underground activities, and we can blend that with the existing open pit and have the potential to increase the number of ounces we produce; and once again we will do that only if it creates value and if there is a market for it,” he said.
Valterra was established after Anglo American undertook a portfolio redesign to focus on commodities with strong growth potential, such as copper, high-grade iron ore, and crop nutrients. This followed a failed takeover bid by Australian giant BHP Billiton.
Anglo American divested from coking coal operations in Australia and nickel in Brazil. It is evaluating its options for De Beers, the world’s largest diamond producer by volume, in which it has an 85% stake.
Valterra is set for a secondary listing on the London Stock Exchange tomorrow to cushion against the impact of a flowback to shareholders. To ensure a smooth transition, Anglo will hold a 19.9% stake following the demerger.
CFO Sayurie Naidoo said the group is committed to distributing 40%of headline earnings to shareholders.
“After looking at Mogalakwena underground, if there is additional cash, we will return that to shareholders either in the form of dividends or we can look at share buybacks,” she said.
“We believe we have sufficient cash. All our assets are cash generative, we will be able to pay our base dividend; however, if prices have to increase from now a 10% lift in prices is a R7bn addition to earnings, and in an instant like that, that is where we look at returning additional cash to our shareholders.”
Miller said Valterra would grasp the opportunity “as a leading PGM producer in Southern Africa to sell and market our products on a global stage”.
“In the last 12 months, we have really worked hard to set ourselves up for a sustainable and successful future.”
Valterra’s shares closed 2.10% lower at R704 a share on Friday.
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