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Anglo American will get a $600mn dividend boost ahead of the spin-off of its platinum arm in the summer.
The London-listed miner, which is undergoing a radical restructuring after defending itself from rival BHP’s £39bn failed takeover attempt last year, will benefit from an additional payout, said the platinum unit’s boss.
Craig Miller, chief executive of Anglo American Platinum (Amplats), the world’s largest platinum company, said it was using the planned demerger to “relook at the balance sheet” as the company announced results.
It will pay out $900mn from its retained cash to shareholders in total, with most going to Anglo American, which has a 67 per cent stake.
Amplats will list in London after June and will also remain on the Johannesburg Stock Exchange. Miller has ruled out the possibility of the London listing happening earlier.
“Given the timeframes that are required for the submission of documentation [and] shareholder approvals, it is unlikely that we will be able to bring forward the secondary listing earlier than the middle of the year,” he said.
Miller added that there would be no change to Amplats’ strategy and that it would not look to compete with its former parent in mining other commodities. “We are a PGM [platinum group metals] producer. We own the PGM assets in South Africa and that’s where our focus will be.”
Earnings at the platinum company fell 40 per cent to $457mn last year, as the price of the basket of metals it sells fell 11 per cent to $1,468 per ounce. These platinum group metals are largely used in the engines of motor vehicles.
At a presentation of the results, analysts asked whether, after a tough year, the extra payout had been driven by Anglo American rather than the platinum producer itself.
Chief financial officer Sayurie Naidoo said this was a necessary change to the capital structure after the demerger and that all Amplats’ mines were cash-generative.
“We do believe our balance sheet is strong and resilient and will be able to cater for the [$900mn] additional dividend,” she said.
Anglo American sold its coal business in November and will offload its diamond mines, nickel assets and platinum unit as part of a plan outlined in response to BHP’s takeover attempt in April last year.
Anglo American will retain a 19.9 per cent stake in the platinum company after the demerger, which Miller said was a “residual stake that will be distributed in an orderly fashion”.
This month, Anglo American chief executive Duncan Wanblad told the Financial Times that additional tariffs on mining companies imposed by US President Donald Trump would probably raise the cost of producing minerals.
Amplats faces the additional risk of being located in South Africa, a country that could be hit by possible sanctions by the new US administration over a new land expropriation law.
Asked about the possibility of sanctions against South African platinum exports, Miller said he was not “overly concerned”.
“I’m not entirely sure what that necessarily achieves, given the necessity of PGMs being used in the automotive sector, which is a key component of the US economy and the US way of life,” he said.
https://www.ft.com/content/481ed4e1-aeff-4a42-a17e-99b06e91f278
