End of an era as British giant exits South Africa platinum

Anglo American is unbundling Anglo American Platinum amidst a troubled Platinum Group Metals (PGMs) environment—a process it hopes to complete by June 2025.

UK-based Anglo American Platinum, also known as Amplats, was founded in 1995 after the unbundling of Johannesburg Consolidated Investments (JCI).

The group has long been a player in the sector, even being a major shareholder of JCI during its latter years.

However, in 2024, Anglo signalled the end of that era when it announced that it would scale back its platinum holdings in South Africa, following its exit from coal in 2021 and 2022.

While Anglo American is not exiting South Africa in totality—Kumba Iron Ore will remain held—the demergers are part of a wider restructuring of the group which is seeing it sell or divest in some of its historic assets.

This is still a relatively tame move compared to what was entailed in another mining giant, BHP’s offer to purchase Anglo American, which would have seen both Kumba Iron Ore and Anglo American Platinum demerged and far more pronounced exit.

The PGM sector has been severely hampered in recent times amidst declining prices, with profits severely hit.

Amidst price challenges, Amplats finalised a retrenchment process in July 2024, with roughly 3,700 jobs affected.

It was not the only PGM miner to cut thousands of jobs, with Sibanye Stillwater and Impala Platinum also announcing widespread job cuts.

PGM prices are extremely depressed amidst a global economic slowdown. Concerns over the industry’s future are also present, as electric vehicles do not require platinum to reduce emissions.

South Africa, which is home to roughly 80% of the world’s platinum, has also experienced several problems that affect the industry, such as electricity shortages and infrastructure issues.

Amidst the challenges facing the company, its parent company Anglo American said that it would unbundle the platinum miner.

The group announced in its financial results for 2024 that the demerger is planned to be completed in June 2025. It said in February 2025 that this remains on track.

It will retain a 19.9% shareholding in the business but plans to exit fully over time.

Amplats CEO Craig Miller said the demerged will result in a “more focused, competitive and independent business, continuing as a leader in the PGM industry”.

He said that the group will have an established platform from which to work, which includes an industry-leading mineral endowment.

An independent company, Amplats, will continue to set up the company for future success, including benefiting from the changing dynamics in automotive manufacturing, with opportunities in fuel cells and battery technology.

There are also opportunities in medical technologies, he said.

The group will remain rooted in southern Africa, with a primary listing on the JSE. A secondary listing on the London Stock Exchange is planned for roughly the time of the demerger.

The move will help the group enhance its share trading liquidity and support its global shareholder base.

“Although PGM prices remain subdued at present, we are optimistic about the long-term outlook,” said Miller.

Financials behind the deal

Amplat’s latest financials reveal that the company is facing significant challenges. The group’s headline earnings dropped by 40% from 2023 to R8.4 billion.

Revenue also fell from 13% to R109 billion, with the rand basket per ounce dropping by 13% to R26,695.

However, despite the drop in revenue and headline earnings, the group declared massive dividends to its shareholders.

The group declared a final dividend of R3 rand per share, totalling R800 million. This is equivalent to a 40% payout of headline earnings, in line with the company’s capital allocation framework.

However, it also declared an additional cash dividend of R59 per share, totalling R15.7 billion. This extra payout for shareholders came from the company’s cash reserves.

The additional cash dividend leaves the miner with only R1.1 billion in cash, which it will need to manage carefully amidst the challenging operating environment for the shareholders.

Amplats said that the increased dividend payouts reflect its confidence in its ongoing ability to generate cash flow.

When it comes to the demerger, Anglo American plans to reduce its shareholding in Amplats from 66.7% to 19.9% to help manage flowback by reducing the size of the shareholding that will be demerged.

Anglo American will also no longer have any representation on the Amplats Board post the demerger and will exit its residual shareholding over time.

The demerger still requires shareholder approval, which the Anglo American intends to seek during its Annual General Meeting on 30 April 2025, subject to governance and regulatory approvals.