Amplats declares first dividend in 7 years, plans no big projects this year

[JOHANNESBURG] Anglo American Platinum (Amplats), the world's top platinum producer, declared its first dividend in seven years on Monday as full-year headline earnings more than doubled and said it was not committing capital to major projects in 2018.

Amplats announced a cash dividend of 900 million rand(S$101.3 million) or 3.49 rand per share for the second half of 2017. It said it had reduced its net debt to 1.8 billion rand from 7.3 billion.

The company's tight-fisted investment stance highlights the fragile state of platinum mining in South Africa, home to around two-thirds of known reserves where the industry has battled for years in the face of soaring costs, depressed prices, policy uncertainty and spasms of violent labour and social unrest.

Amplats has been moving from the labour-intensive methods that have defined South Africa platinum mining to more mechanised mining - a change that appears to be paying off.

The Anglo American unit said headline earnings more than doubled to 3.9 billion rand in 2017, in line with what it previously flagged to the market, lifted by cost cutting and a higher dollar basket price for platinum group metals.

"No major project capital will be committed in 2018," the company said.

Analysts say one barrier to investment has been a revised industry charter that increases regulations including black ownership requirements.

But South Africa's Chamber of Mines said on Sunday it had agreed to postpone a court challenge against the new regulations to allow for negotiations with new South African President Cyril Ramaphosa.

Amplats said it was looking at possible future expansion projects at Mogalakwena, a mechanised open-pit operation that is its main cash-spinner and where it recently reached a deal with local communities and tribal authorities.

Mogalakwena produced a record of almost 1.1 million platinum group metal ounces, up 12 per cent, with platinum production 13 per cent higher to 463,800 ounces. Palladium output was up 13 per cent to 508,900 ounces.

The mine recorded free cash flow of 4 billion rand, up from 3.2 billion rand in 2016.

REUTERS