Anglo American Exits South Africa’s Platinum Sector: The Unbundling of Amplats

In a significant move for the South African mining sector, Anglo American has announced its plan to unbundle Anglo American Platinum (Amplats) amid a turbulent landscape for Platinum Group Metals (PGMs). The unbundling process is expected to be completed by June 2025, marking the end of an era for a company that has played a pivotal role in South Africa’s platinum industry since its inception in 1995.

A Legacy of Mining

Anglo American Platinum has a rich history, originating from the unbundling of Johannesburg Consolidated Investments (JCI). Over the years, the group has maintained a strong presence in the platinum sector, significantly influencing the local and global markets. However, the announcement to reduce its platinum holdings comes after a series of strategic decisions, including the exit from coal in 2021 and 2022.

While the company will retain its Kumba Iron Ore operations, the divestiture of Amplats is part of a broader restructuring strategy aimed at streamlining operations and focusing on more profitable ventures.

The PGM Sector’s Struggles

The decision to unbundle Amplats is not without its challenges. The PGM sector has faced significant hurdles, including declining prices due to a global economic slowdown and shifts in demand as electric vehicles become more prevalent, reducing the need for platinum in emissions control. Additionally, South Africa’s mining sector grapples with electricity shortages and infrastructure issues that have further complicated operations.

In 2024, Amplats was forced to undertake a retrenchment process, resulting in the loss of approximately 3,700 jobs. This move mirrored similar actions taken by competitors like Sibanye Stillwater and Impala Platinum, highlighting the widespread impact of the current market conditions.

Future Plans for Amplats

Despite these challenges, Amplats CEO Craig Miller remains optimistic about the future. The unbundled company will operate independently, allowing it to focus on emerging opportunities in fuel cells, battery technology, and medical technologies. The shift aims to position Amplats as a competitive player in a changing market landscape.

Anglo American plans to retain a 19.9% stake in Amplats post-demerger, reducing its shareholding from 66.7% to allow for a smoother transition. This strategic move is intended to manage flowback and streamline operations. Additionally, Anglo American will withdraw its representation from the Amplats Board, marking a significant shift in corporate governance.

Financial Overview

Amplats’ financial performance has been under pressure, with headline earnings dropping by 40% to R8.4 billion and revenues decreasing by 13% to R109 billion. The decline in the rand basket per ounce further exacerbated the situation, falling to R26,695.

Despite these setbacks, the group has continued to prioritize shareholder returns, declaring substantial dividends totaling R15.7 billion. However, this has left the company with only R1.1 billion in cash reserves, necessitating careful management as it navigates the challenging landscape.

The unbundling of Amplats is poised to reshape the South African mining landscape as Anglo American seeks to adapt to evolving market conditions. The decision is subject to shareholder approval during the Annual General Meeting on April 30, 2025, alongside necessary governance and regulatory approvals.

As the industry braces for the impact of this strategic shift, stakeholders will be watching closely to see how Amplats can leverage its strengths to thrive in a competitive environment.

Follow Joburg ETC on Facebook, Twitter , TikTok and Instagram

For more News in Johannesburg, visit joburgetc.com