South African mining giant feels the pain

Valterra Platinum said first-half profit fell 91%, after flooding at a key mine cut production and the company incurred costs during its recent spinoff from Anglo American.

The Johannesburg-listed miner also slashed its interim dividend to R2 per share, a drop of 79% compared with a year earlier, according to results released on Monday. Valterra completed its separation from Anglo at the start of June.

Despite the disruption caused at the firm’s Amandelbult mine by heavy rains in February, Valterra still expects to meet its annual target for refined production of 3 million to 3.4 million ounces of platinum-group metals.

Profits were also impacted by R1.4 billion in one-off demerger-related costs when Valterra split from Anglo. The decline in earnings was partially offset by cost savings of R2.1 billion, the company said.

Anglo American spun off its platinum business at the beginning of June, distributing its controlling interest in Johannesburg-listed Valterra Platinum to shareholders.

The spinoff came after more than two decades during which platinum-group metals were a core driver of both the fortunes of Anglo and South Africa.

The industry eclipsed gold — the historic foundation of the country’s wealth — 25 years ago, just after Anglo strengthened its grip on the sector by taking control of what was then the world’s biggest platinum producer.

Valterra has spent about $500 million in the last seven years on developing new markets for PGMs, including hydrogen-powered transport, cloud computing and food preservation, according to Miller.

It’s also invested in a firm trying to reduce the weight of EV batteries by introducing palladium. 

Valterra will continue those efforts, but it’s also hoping that auto demand will hold up better than many previously expected, buoyed by hybrids as EV penetration slows.