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FIFI PETERS: Shares of Anglo Platinum fell 3% today following the release of its annual results. The stock managed to recoup lost ground, however at the close [of trading was down] just under 2%. I asked CEO Natascha Viljoen what she made of the market’s reception of the group’s earnings report.
NATASCHA VILJOEN: I think that’s a really relevant question, Fifi. So let’s quickly unpack 2022, just from a broader operational point of view.
I think the first perspective that we need to have is that in 2021 we unwound a million ounces that had built up from 2020 ACP [Anglo Converter Plant] interruptions, if you can remember. So we have refined and sold over five million ounces, of which a million were actually meant to have been delivered in 2020.
We also delivered that in the highest price environment in the history of PGMs [platinum group metals], and we did so before we’d seen the significant inflation increases in 2022.
So I think those are probably contextually important for us to consider.
Now let’s focus on 2022. I think it’s important for us to probably look at the underlying [factors] that are the real drivers of long-term performance. And there we have seen, if we look at our metal and concentrate production, a 7% reduction year on year. That was driven mainly by two areas.
The one is planned infrastructure closures at Amandelbult, for which we now have dedicated plans [for] replacing those ounces in the coming years. But those were planned and we knew they were coming.
The area that we didn’t consider, because of some challenges we had on the mine, was great discrepancies at Magalakwena, where we’ve seen materially lower grades in the areas that we’ve mined – lower than we anticipated.
We saw that coming through in the middle of last year, and there was significant intervention with the increase of a drilling programme, the quality of our modelling. And we leapfrogged ahead to now having a 3D model, three-dimensional model, that will include all of our RC [reverse circulation drilling); really short-term drilling and diamond drilling in the long term in one sophisticated model that really underpins our forecast going forward.
That was also the basis of a reset for market guidance, a reduction in market guidance at the end of last year.
Now, that’s not a long-term impact. I think it’s important to consider that it is a short to medium term impact, and we see that coming back to normal levels by 2025.
I think it’s important to notice – and we put that into our Sens – it’s the first time that we’ve announced on our resource reserves, but we know that there’s a concern around the future of Magalakwena and the poor quality of the ore body. There is quite a detailed process that we go through to announce resource and reserves. That has only decreased by normal depletion, and we didn’t see any of these short-term grade impacts on the long-term model, which just continued to underscore the quality of the asset.
FIFI PETERS: All right.
NATASCHA VILJOEN: So I think those are all important considerations.
FIFI PETERS: Natascha, [you] pointed to the fact that the dividend was a lot lower than expected. I suppose that is a function of profitability also coming back more than expected, but what does that picture look like in the period ahead?
NATASCHA VILJOEN: Fifi, we’ve got a dividend policy that is very clear on a 40% payout of headline earnings.
For the first time in a while we didn’t declare a special dividend, and I think that’s the portion the market didn’t fully appreciate this time around.
We have declared a special dividend every time for a long time up to now. I think it’s also important to consider that it is still for the full year a 62% dividend yield, which is significant. And we have paid out all of the cash that we generated in the year, so we didn’t hold on to cash to pay out that 40% dividend.
I think it’s also reflective of the continuous work and investment we want to [make] in our business on asset reliability … and growth opportunities, and then just considering the very fast and challenging environment, high inflation rates, and the uncertainty around electricity.
From a capital discipline point of view it’s important for us just to breathe for a moment and make sure that we support our balance sheets until we bring more clarity on some of the headwinds that we’re still facing.
FIFI PETERS: Okay. So breathing means what? No acquisitions?
NATASCHA VILJOEN: No special dividends; that’s specifically reflective of the special dividends.
FIFI PETERS: Okay.
NATASCHA VILJOEN: Because you’ll see we continue to invest in the business. Our forecast on the SIB [stay-in-business operations] is R11 billion this year. So we continue; we’ve made over the next three years an R8 billion commitment. While some of it is committed, some of it is planned, the majority of that is committed already to Magalakwena and the work that we need to do for the future of Magalakwena. There’s life ex [life-extension projects] at Amandelbult and Mototolo, so we keep on investing in the business.
FIFI PETERS: Commodity prices – just your view on that? The minerals that you mine, that basket did come down in dollar terms in the period under review. What’s your forecast for your commodities in the year ahead?
NATASCHA VILJOEN: I think it’s probably important to note that it’s the second-highest dollar price in the history, and the highest rand price in the history of PGMs.
FIFI PETERS: So still high, but not as high –
NATASCHA VILJOEN: Just looking forward, the market is moving quite quickly and it is moving quickly [because of] a couple of factors – the geopolitical challenges with Russia and Ukraine impacting performance, and then also the fact that there are some soft sanctions against Norilsk with the association with Russia. So we see metal flows change, and we also saw them revising their guidance due to the impact of supply to them. They were really struggling to keep their normal production rates at the level that they did. So we saw that.
We also saw China coming in and then going back into lockdown over the last period of time. We’ve seen the supply-chain challenges to manufacturing; vehicle manufacturing softened, [with] specifically chip shortages. And we’ve seen generally in South Africa also a reduction of supply.
So if you consider slightly higher demand from an automotive point of view, a 7% increase last year, now, on pre-Covid levels, we see the demand increase but we’ve also seen a softer supply for all of the reasons that I’ve just mentioned.
So generally our forecast is that all of our metals will be in deficit this year, with palladium and then rhodium going into marginal surpluses in the coming years.
FIFI PETERS: All right. So that translates to higher prices for most of your metals.
NATASCHA VILJOEN: Exactly.
FIFI PETERS: Okay. Good to know. So reflecting back on your share price as well, Natascha, the loss today extends a loss for the week. That was triggered in part by the announcement of your resignation, which again caught the market off guard.
You’ve told us where you are going and when you’ll be leaving, but why are you leaving and why are you leaving so soon?
NATASCHA VILJOEN: Well, Fifi, I think firstly I did not go and look for an alternative opportunity. This is an opportunity that [came when] someone knocked on my door and said ‘Are you interested?’ Now, the kind of senior roles in the industry, something similar, [and in terms of] the next steps in my career, are very few and far between, and even more so [with] the size of the company and the alignment with values and purpose.
So when Newmont came knocking, it was really hard to say I wouldn’t at least listen. The opportunity is really well aligned with the next steps in my career.
Now it is quite quick, if you consider I’ve just been in my role for three years.
I think, firstly, [I was] committed to remain up to 12 months as per my contract, and fully committed to make sure that I serve my team and the board in this role, as I have been all of the time.
But it is an opportunity. The timing of the opportunity is not ideal, but if I reflect on that, the work that we’ve done in the three years was firstly to put a really strong management team in place.
Now that that work is done, I would argue that we [would have to go far] to find the quality and the calibre of the team that we’ve put together, both on our direct executive and also in our broader senior management in the team.
We’ve reset our strategy. We have fundamental building blocks in place, and we are maturing those building blocks. We’ve a clear understanding of the growth opportunities of all of our assets.
So I would argue that by the time I leave in the next six or eight or nine months, the team is well set up and there will be a lot of stability in the business to continue to work.
FIFI PETERS: Okay. So you’re not serving your full 12 months’ notice?
NATASCHA VILJOEN: It’s going to be in the market. We are busy with recruitment and it’s going to depend on when a suitable replacement is identified and a proper handover [can take place].
FIFI PETERS: Okay. Were you happy? I know what you’re saying, you’ve just said that you received a great opportunity and it was difficult for you to say no. But you were also a glass-ceiling breaker in your recent appointment, and I’m wondering if there’s anything else that influenced your decision to leave so soon.
NATASCHA VILJOEN: Fifi, I can with my hand on my heart say no. I think within Anglo, within Anglo Platinum, I’ve only always received a significant amount of support, care and respect. So none of that is related to Anglo.
FIFI PETERS: So your relationship with the new CEO there is perfect?
NATASCHA VILJOEN: We’ve got a good relationship and we’ve been working closely together. He’s asked me to help with the replacement, and I think if there were issues with our relationship he wouldn’t have asked me to support him finding a replacement. But [he is] equally aware that this is quite a unique opportunity. So I can guarantee that there are no issues within the company.
FIFI PETERS: Okay. Natascha, we will have to take your word for it. We’ve got nothing else, but thanks so much for your time, ma’am, and for taking all the questions. Natascha Viljoen is the CEO of Anglo Platinum – for now.
