Amplats 'not on the back foot'
Anglo American Platinum's CEO is confident positive results will continue despite ongoing strikes.
JOHANNESBURG - Anglo American Platinum is confident of continued profits following its announcement of increased earnings earlier on Monday.
This despite concerns that ongoing labour unrest and a negative difference between the cost of production and sale price of platinum could set it back again.
Speaking to 567 CapeTalk/Talk Radio 702's Bruce Whitfield on Monday evening, Amplats South Africa CEO Chris Griffith said he was looking forward to continued growth following major changes at the company.
Griffith outlined the various restructuring moves and lengthy strike action experienced by the company in 2013.
He said despite the problems, the company had healthy profits.
"I think that was a good performance. Yes, we've got industrial action underway, but I don't think we're on the back foot yet."
He says the company effectively closed four mines and reduced over 7,500 positions before redeploying around 2,300 of those into vacancies across the group.
Griffith denies having been draconian with the cuts, arguing that it was necessary to keep the company at large afloat.
With the latest round of strike action, as many as 100,000 Amplats, Impala Platinum and Lonmin employees belonging to the Association of Mineworkers and Construction Union (Amcu) have been away from work for three weeks.
They are demanding R12,500, which Griffith says is effectively double the current standard pay.
The National Union of Metalworkers of South Africa has also joined the strike.
Griffith says the industrial action is hurting, but they are working hard to bring the parties closer to an agreement.
"At the moment, we're still far away with Amcu not having moved from their original demands which will add R13 billion worth of cost, so clearly that's not sustainable and we need to get closer to each other. We think we've got a very competitive offer on the table at the moment with an offer in the region of eight to eight and a half percent, which is a good three percent above inflation."
Ahead of the strike, some analysts argued platinum producers had prepared for the action and stockpiled resources, meaning they would be able to wait out the strike longer than the union.
But Griffith wouldn't be drawn on how much stock the company now has left.
"It wouldn't be in our best interest to publish that number because that of course indicates where our pain threshold is. But we've got enough stock to take us through the next couple of weeks."
He says this doesn't mean they are sitting pretty.
"Ultimately, this is not just about seeing who can last longer than the other because no matter what happens, the company and the country lose the revenue while we are on strike. At the same time, our employees lose their salaries. Everyone's losing at the moment."
On top of the strike action, the company is also facing difficulty in selling platinum at a profit.
With platinum costing around seven percent more to produce than is returns in sales, Amplats certainly isn't set for easy success.
But Griffith believes continued resilience will see the company moving forward.
At the same time, a weak exchange rate means the company earns more rands off its sales, but also faces the prospect of increasing inflation.
This in turn could affect labour relations yet again if wages don't keep up.