Angloplats set to defend board

LONDON newspapers have been full of stories that Anglo American and its embattled chief executive, Cynthia Carroll, would use the interim results of Anglo Platinum to kick off a robust indirect defence of the group's board to reject a "merger of equals" proposal from Xstrata.

It has, indirectly.

Angloplats produced 2,09 million ounces of platinum group metals (pgms) in the first half of this year against 4,53million ounces for the whole of last year and an abnormally low 1,89million ounces in 2008's first half when production was affected by power outages and flooding.

Nevertheless, lower metal prices in rands and dollars contributed to a fall in first-half sales revenue to R17,2billion from last year's interim R27,6billion, while the gross profit on metal sales crashed to R677million from R1,3billion.

The company is taking tough action. At its mines just short of 12000 employees have been laid off since last September and Johannesburg head office numbers have been pared by 120.

One unprofitable shaft has been placed on care-and-maintenance and another two face the same prospect.

Operations at the Rustenburg and Amandelbult sections have been split into discrete operating mines - a strategy that could facilitate further closures and, the company says, better control of costs and operations.

In total the closures are expected to remove an annual 140000 ounces of unprofitable production, presumably to be replaced by profitable metal though where that might come from in the immediate future is not stated explicitly.

Other, longer-term development projects remain, though some have been halted or delayed in line with expected demand and to conserve cash.

As it is, Angloplats sees some bright spots in the platinum market.

It expects platinum itself to average more than $1200 an ounce for the rest of this year.