Time for tough decisions – Amplats CEO
Chris Griffith says the platinum industry needs to see major structural changes.
JOHANNESBURG - Anglo American Platinum (Amplats), the world's biggest platinum producer, on Monday warned unrealistic wage demands from unions in upcoming negotiations could put more jobs in jeopardy.
Amplats CEO Chris Griffith admitted to 567 CapeTalk/Talk Radio 702's Bruce Whitfield his company was not at its best and was facing much higher levels of debt.
The company's sales are up by 11 percent and the price per ounce of platinum increase by 12 percent due to a weaker rand.
Debt levels have risen by R2.7 billion and "that's the number to watch," Griffith says.
The industry has also been plagued by major strikes.
"It doesn't help that we have unrealistic wage demands and it's impossible that we can give in to those kinds of wage demands when we're seeing the levels of debt rise in the company."
Asked how talks are going with the major unions, the National Union of Mineworkers (NUM) and the Association of Mineworkers and Construction Union (Amcu), Griffith says the difficulty the company is facing is a major discussion point.
"It's very important, the process that government started, with the president and then the deputy president. That's where the really constructive conversations are happening."
Problems faced by the industry are not simply a phase, Griffith added.
"This is not just a cyclical term, and we're not just at the bottom of a very tough point in the cycle."
The industry has seen a number of major changes, he says, and earlier methods of dealing with problems will not work anymore.
"If we just carry on the way we have in the past, we're going to end up in a very difficult and sick industry."
Some of the major changes were in terms of demand.
There was a major drop in demand for rhodium and platinum, as these minerals were no longer used in engine catalysts.
While rhodium made up 27 percent of the company's earnings, it now brings in only 7 percent.
Further, increased platinum recycling has created a different source of supply.
"A couple of years ago, 500,000 ounces came from recycling, now that supply is 2 million ounces and increasing."
Essentially, the industry has become too large to support itself.
"We're finding an industry that is structurally over-supplied," Griffith says.
More mining is not the solution, the CEO says.
"What that means is that we're going to start having to make some very, very tough decisions around the operating mines in Anglo American Platinum."
He was optimistic that major structural changes in the industry would bring about better times.
Griffith doesn't know which way it will go.
"[If we] look back in a couple of years and we've pulled it off, managed to turn it around and the industry's in a much better shape, then we may give ourselves a pat on the back. Of course, we may look back in a couple of years and say, we failed miserably and by then, I'll probably be fishing."