JOHANNESBURG (miningweekly.com) – The deaths of two mineworkers at the Amandelbult mine marred an outstanding performance by Anglo American Platinum (Amplats), which has paid out a total of R3-billion cash in dividends for the 12 months to end December, recorded record production from the Mogalakwena, Unki and Kroondal mines, generated free cash flow of R5.6-billion, increased capital expenditure (capex) going forward on particularly low-capex fast-return projects, and is studying the possibility of establishing a 100 MW solar power plant in Limpopo.

As the best-performing share on the JSE All Share Index in 2018, Amplats delivering a top-rate total shareholder return of 55%.

Its headline earnings per share soared by 95% to R28.93 a share, earnings before interest, taxes, depreciation and amortization rose 21% to R14.5-billion, return on capital employed increased to 24% and the dividend pay-out ratio has been lifted from 30% to 40% of headline earnings.

“The fact that two of our colleagues died at work in 2018 is deeply tragic and felt by every one of us. Notwithstanding the significant improvement in the number of fatalities and injury rates, these tragic deaths have heightened our resolve and efforts to eliminate fatalities,” Amplats CEO Chris Griffith commented in a media briefing attended by Mining Weekly Online.

Platinum group metals (PGMs) production increasing by 4%, net debt was cut by R4.7-billion and the price of the company’s basket of metals increased by 13%, buoyed by palladium averaging $1 029/oz and rhodium $2 200/oz.

Griffith sees platinum as occupying a promising position going forward as its poises itself to, at some stage, substitute palladium in gasoline vehicles, progress its use in heavy duty diesel vehicles and grow its industrial uses.

Though its smelters have been curtained by Eskom load-shedding, catch-up is likely going forward. Longer-term consideration is also being given to solar power and dealing with regulator issues that restrict solar power to 10 MW at a time with Amplats studying the possibility of establishing a 100 MW solar plant to provide half the power to its high-performing Mogalakwena mine.

The solar strategy involves engaging a third-party solar power company to build, own and operate the solar plant and sell the electricity generated back to the Limpopo mine.

During the year, the disposals of Union mine, the equity holding in Royal Bafokeng Platinum, and the 33% interest in Bafokeng Rasimone Platinum Mine were concluded.

At the same time, the company completed the acquisition of Glencore’s and Kagiso Platinum Venture’s stakes in the Mototolo Joint Venture, making it a wholly owned operation. Furthermore, in support of the objective of growing demand for its metals, the launch of AP Ventures was concluded, committing $200-million together with the Public Investment Corporation. Amplats continues to advance project studies to evaluate the optimal expansion plan at Mogalakwena and assess the potential synergies at Mototolo and Der Brochen.

Mogalakwena had another record production year of 1 170 000 PGMs ounces, up 7%. Total PGM production at Amandelbult increased by 1% to 868 800 oz on increased underground production delivered to the concentrator, primarily from Dishaba.

Unki mine in Zimbabwe had a record performance in 2018, producing 192 800 oz, an increase of 16%. Mototolo had an improved performance in 2018 increasing production by 56% to 287 700 oz, which included some production overflow from 2017 toll concentrated at Bokoni.

Total production from joint venture mines increased 5% to 477 000 oz, and purchase of concentrate ounces was up 13% to 2 291 900 oz.

Refined production was, however, lower than mined production due to the temporary build-up of work-in-progress inventory. The planned rebuilds of Mortimer smelter in quarter two (Q2), and Polokwane smelter in Q3, the commissioning of the Unki smelter in Q3 and other maintenance on processing assets resulted in the inventory build, which the company expects will be fully processed in 2019.

Sales volumes of 5 224 900 oz were 3% down on last year’s owing to the lower refined production, which was partially offset by a drawdown in refined inventory.

Amaplts continues to pursue multiple marketing streams for PGMs. This is undertaken globally through a mix of marketing efforts in existing or near-term demand segments, such as jewellery and investment; and targeted market development in longer-term growth areas, such as fuel cells, hydrogen and clean energy. Importantly, where possible, the company aims to integrate demand stimulation with developing skills and building capacity in South Africa.

“We’ve evolved our strategy to deliver the next phase of value,” Griffith told Mining Weekly Online.

Amplats has a strategic focus on operational excellence, investing in its portfolio of operations and facilitating the development of global demand for PGMs.

The first is aimed at allowing it to realise the full operational value through employees and innovation, by operating beyond current world benchmark levels of performance.

Studies for expanding palladium-rich Mogalakwena opportunities are continuing.

Facilitating the development of demand for PGMs remains key.

“We expect this series of strategic actions to increase cash flows and returns and reinforce the sustainability of the company for the benefit of all our stakeholders,” said Griffith.