Amplats faces tough task to exit operations in SA
Anglo American Platinum (Amplats) could face a protracted exit from local mines it wants to divest of amid a plunge in metal prices, which is hurting asset values and investors’ appetite for deals.
Amplats is expected to provide an update on how it will dispose of four ageing, labour-intensive mines when it releases its results tomorrow.
The company said in February it would decide by June whether to sell or separately list the operations should bidders not meet the producer’s valuations for the assets. Parent Anglo American was leaning towards a listing, CEO Mark Cutifani said in April.
Amplats plans the disposals amid a 32% drop in the platinum price in the past 12 months and as costs increase. According to Ben Davis, a mining analyst at Liberum Capital in London, the most likely scenario was that it would spin off the assets as an independent company while selling shares for a portion in the new entity.
“I certainly won’t hold it against them that they didn’t get the sale away when platinum prices are where they are,” said Davis. “I don’t regard a listing as a great idea either, because I don’t see how anyone could ascribe any real value to it.”
Amplats spokesperson Mpumi Sithole said: “Our objective is to exit the Union and Rustenburg mines in the most appropriate manner ... through either a sale or public-market exit, to maximise value for shareholders.”