Amplats chief spells out worrying factors

Johannesburg - South Africa needed to deal with worrying factors, including Eskom’s power cuts and uncertainty about regulations in the mining industry in order to attract investment, according to the chief executive of Anglo American Platinum (Amplats).

In an interview with Business Report yesterday at the V&A Waterfront in Cape Town, Chris Griffith said it was not all doom and gloom for the industry, but it needed to sort out some of the pressing issues.

The chief executive of the world’s biggest producer said job cuts were on the cards at managerial level in his company as it continued to restructure.

Last year Amplats said it was reviewing its staff complement and making plans to trim its workforce.

“As a result of us potentially exceeding some of the mines, at the overhead level not at the operation, we are likely to see some reduction in labour at a managerial level. The remaining size of the company must fit the size of the operations that we must service,” Griffith said.

He was, however, unable to quantify that saying that work was still in progress.

On weak commodity prices globally, Griffith said he was anticipating a good production year of between 2.3 million and 2.4 million ounces.

He said Amplats would spend between R5 billion and R6bn, but the profitability would depend on the rand/dollar exchange rate and on the platinum prices, both of those were very difficult numbers to predict.

He was anticipating that all of the mining company’s cost-cutting measures would come through.

With the current low commodity prices, Griffith said companies had to adjust and make money in the current challenging environment.

He was not anticipating the rand/dollar (exchange) to strengthen materially.

However, he was anticipating an increase in the platinum price sometime in the later part of the year.

“I can make sure that we are profitable even at these prices; so any upside in price will be an upside in our profitability. I cannot wait for an improvement in price before we can make money, we’ve got to be able to make money at these kind of prices,” Griffith added.

On the issue of Eskom’s power cuts, he said Amplats was less impacted by the cuts for now but was worried about the second quarter of the year.

“I’m worried a bit more in the second half of the year because we run much harder in the second half,” said Griffith.

Acknowledging the country’s challenges, Griffith said South Africa was still a good investment destination.

He was still enjoying his job, saying “as long as the shareholders would have me, I’ll be around. It’s ultimately their choice.”

Pressed about his executive pay statement he made last year during the strike, about being paid fairly, he brushed it off saying the issue should be about what workers were earning.

“Enough has been said about executive pay, the most important thing is what we are doing around making sure that we lift the levels (of) pay at the bottom level. How do we make sure that what they get paid they can get home,” said Griffith.