CAPE TOWN, South Africa--Anglo American Platinum Ltd. (AGPPY),
the world's largest platinum producer, warned Monday that the
strike underway in South Africa could force the company to consider
other cuts at the business if it continues for much longer, a move
that would deal a blow to an already ailing sector and an important
pillar of South Africa's economy.
Chief Executive Chris Griffith said some of its mines remain
"marginal" and "if we have a protracted strike we will have to
rethink those mines going forward."
Mr. Griffith's comments come as the world's three largest
platinum producers--Anglo American Platinum, Impala Platinum
Holdings Ltd. (IMP.JO) and Lonmin PLC (LONMY)--are trying to end a
strike that was started Jan. 23 by the dominant union in the
sector, the Association of Mineworkers and Construction Union, to
demand higher wages. The strike is costing the industry about $18
million a day in lost revenue. A second union, the National Union
of Metalworkers, joined the strike Monday at Anglo American
Platinum.
Last week, Lonmin said due to the strike it would may have to
lower its production outlook for the year.
Anglo American Platinum, which is majority owned by U.K.-listed
miner Anglo American PLC (AAL.LN), Monday posted a smaller net loss
attributable to shareholders of 1.37 billion South African rand
($122 million) for 2013, compared with a loss of ZAR6.68 billion
the year before, when the company was hit by an industry-wide
strike.
The company said the loss in 2013 was due to one-time costs of
ZAR1.5 billion related to its restructuring and asset write downs
of ZAR2.8 billion. Anglo American Platinum said a higher tax rate
also led to the loss for the year.
The company said that its headline earnings, excluding
write-downs and exceptional restructuring costs, showed a return to
profit despite the industry-wide strike.
Operating profit totaled ZAR2.0 billion for the 12 months ended
Dec. 31, up from a loss posted in 2012 of ZAR6.33 billion. Revenue
increased by 22% on the year to ZAR52.4 billion. Refined platinum
sales increased to 2.32 million ounces from 2.17 million ounces the
year before.
In 2013, the company started to implement a plan to reduce
output and employees to improve the profitability of the platinum
mining business. The company reduced its five mines in the
Rustenburg area to three and reduced jobs by 7,500, which included
moving about 2,300 people to other positions within the
company.
Mining accounts for 6% of South Africa's gross domestic product
and mineral exports make up 60% of export revenue. Companies have
already cut several thousand jobs because of costly strikes and a
weakening demand environment in the past two years, a blow to South
Africa's high unemployment rate of around 24%.
The workers on strike now are demanding that their employers
raise entry-level salaries to ZAR12,500 rand ($1,150) a month from
around ZAR5,000. Companies have offered an up to 9% increase.
If companies agreed to the union demand, that would increase
costs by ZAR13 billion, Mr. Griffith said, adding that is not
something the industry can afford right now.
Write to Devon Maylie at devon.maylie@wsj.com
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