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16 January 2013 | Anna Reynolds
Anglo American Platinum plans to make R3.8 billion (£270 million) annual savings by 2015 through efficiency and cost reduction initiatives.
Following a review announced in February 2012, the company proposes to restructure its South African operations in Rustenburg from five mines to three to deliver greater value. The review was prompted by predictions of increased demand for platinum and a number of structural changes that have affected the company’s profits in recent years.
The company also plans to reduce capital project expenditure over the next 10 years by approximately 25 per cent, equating to R100 billion (£7 billion), to focus investment on low-cost, high-margin projects.
Chris Griffith, CEO of Anglo American Platinum, said in a statement: “We must evolve to align the business with our expectations of the platinum market’s long-term dynamics and address the structural changes that have eroded profitability over time.
Several of its mines are considered unprofitable, including four shafts at Khuseleka and Khomanani. Operations in those locations will be suspended, which means total platinum production will be reduced.
Included in the annual savings will be R390 million (£27 million) from optimising Anglo American’s overhead costs. The company said around 14,000 jobs may be affected, the majority of which will be in the Rustenburg area. Anglo American has said it will provide a support package to its employees and communities in Rustenburg and will create 14,000 new positions.
“By creating a sustainable, competitive and profitable business, we will be in a stronger position to continue substantial investment, provide more secure and stable employment, and to benefit our customers, suppliers, shareholders and the South African economy as a whole,” added Griffith.