- Daily Zen
Anglo American Platinum Ltd., the world biggest producer of the metal controlled by Anglo American PLC, informed that it saw an operating loss of approximately $715 million in 2012 as its production was affected by violent labor strikes in South Africa. Not only violent labor unrest in South Africa led to the loss as the company had been struggling amid weak demand from its major consumers, including European carmakers hit by the debt crisis. The company noted that demand would probably remain weak in the crisis-hit Europe.
On the 4th of February, Anglo American Platinum, also known as Amplats, posted a loss of approximately $752 million in 2012, compared to a 2011 profit of roughly $1 billion. The world’s biggest producer of platinum is facing many challenges. However, it underlined that the loss was mainly driven by violent labor strikes in South Africa as they led to the production shutdown. But also increased inflation and lower metal prices hit the company’s performance.
Even though the company understands that many factors contributed to the recorded loss, its officials underline the significance of violent labor strikes in South Africa which started in August 2012. According to data, during labor unrest, which was called an “illegal industrial action” by the company, the world biggest producer of the metal lost production of nearly 306,000 ounces of platinum. As a result, Anglo American Platinum decided to take an unpopular and drastic decision as it fired as many as 12,000 workers. Most of them returned to work in November.
As Anglo American Platinum witnessed unsetting conditions and reported a significant loss, it decided to continue to skip paying dividend. The company is, without a doubt, facing many challenges amid uncertain economic conditions and weak demand. Therefore, the company might even decide to shut down some of its operations and downsize it workforce even by cutting 14,000 job positions. All these moves are aimed at reducing costs and stemming losses. Yet the plan was postponed as it was widely criticized by the South African government.
By implementing the aforementioned plan, Anglo American Platinum expects to reduce its production target to between 2.1 million and 2.3 million ounces per year. All of these steps are aimed at helping the company to adjust to current conditions and expected demand. However, due to the strong opposition from the South African government, the world’s biggest producer of platinum had to postpone its plans. Chris Griffith, chief executive officer at Anglo American Platinum Ltd., underlined dramatically: “We are trying to return the company to profit.”
The company is gearing up for different scenarios as it is aware that the shutdown of its unprofitable operations and downsizing may lead to new violent labor strikes. South Africa is, in particular, a very hard place to do business as it is an arena of numerous complex social issues. Therefore many analysts are strongly convinced that Anglo American Platinum Ltd. will be forced to minimize production cuts to safeguard job positions. Backing down from the plan would lead, certainly, to a slowdown in recovery.