Anglo American Platinum Ltd. has proposed a restructuring that could impact around 4,300 jobs in its South African operations following a 71% drop in profits last year.

Amplats Returns Were The Lowest in 30 Years

Amplats, as the company is known, along with other companies in Johannesburg, has experienced a sharp decline in its financial situation. These companies enjoyed high profits due to strong demand from automakers, which drove the prices of metals like rhodium and palladium to record levels just two years ago. 

In December, Anglo American Plc, the company's parent, stated that returns for platinum-group metal miners were the lowest in 30 years and that the restructuring may affect approximately 3,700 Amplats employees, about 17% of its workforce, and over 600 contractors.

A Call for Restructuring Amid Falling Metal Performance

CEO Craig Miller stated in a Monday statement that further steps are needed to enhance resilience and competitiveness to sustain the business. These actions are essential to maintain the employment of thousands of workers and contractors. On a conference call, Miller stated that the restructuring is a last resort, given the recognition of unemployment challenges in South Africa and the potential socio-economic impact on people and communities.

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Significant Dropping Trend in Amplats' Profit

The Johannesburg-based company reported a significant drop in profit to 14 billion rand ($741.81 million) for the year ended December 31, compared to 48.8 billion rand the previous year. Amplats dividend was also reduced by 81% to 21.30 rand per share.

The prices of the three main platinum-group metals have plummeted since the beginning of last year: platinum by 17%, palladium by 43%, and rhodium by 64%, hastened by destocking in the auto industry and lower-than-expected demand from China.

Still, Amplats stated that the payout remains within its ratio of 40% of headline earnings, with the prices of palladium and rhodium dropping by 37% and 58%, respectively, during the year. Other South African mining companies like Sibanye Stillwater have also revealed intentions to reduce jobs because of the decline in metal prices.

Section 189A: A Consultation Period Before Restructuring

CEO Craig Miller stated that the Section 189A process includes consulting with trade unions and affected employees, facilitated by the Commission for Conciliation, Mediation, and Arbitration, and the final number of impacted jobs will only be determined after the consultation process is complete. 

Amplats has started reviewing its contractors and vendors, which might affect approximately 620 service providers and contractors. This review could lead to renegotiating some contract terms and scopes, not renewing contracts upon expiration, and even terminating contracts according to contractual provisions. 

Extensive Cuts as Part of Cost-Cutting Measures

Anglo American CEO Duncan Wanblad told Reuters on February 5 that the group was considering more significant cost reductions if market conditions did not improve. In December, Anglo American had announced extensive cuts to save approximately $1.8 billion by 2026.

Amplats is delaying planned projects at its Amandelbult complex as part of the cost-cutting measures, said the company.

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