South Africa’s electricity crisis cuts into Amplats profit, leads to dividend cuts

Anglo American Platinum, the world’s biggest platinum miner by market value, cut its dividend payout as worsening power outages in South Africa curb production and profit.

The Anglo American Plc unit reduced its total 2022 payout by 62% as state-owned utility Eskom struggles to keep its coal-fired power plants working. To minimize the risk of a total grid collapse, Amplats is receiving more requests to curtail its power usage, CEO Natascha Viljoen said on a conference call. South Africa is the world’s No. 1 platinum producer.

“This financial year has seen us navigate a complex operating environment, with macro-economic challenges, supply chain disruptions, socio-economic unrest and electricity load-curtailment, as well as some operational headwinds of our own,” Viljoen said in a statement on Monday.

Johannesburg-based Amplats will pay R30 billion to investors after profit before some one-time items – known as headline earnings – dropped 38% last year. The payout slumped to R115 per share, from R300 the previous year.

The payout is below a Bloomberg consensus of 149.28 per share and “will come as a disappointment to the market”, RMB Morgan Stanley analysts, including Christopher Nicholson, said in a note. Amplats shares fell as much as 5.2% in Johannesburg.

Amplats full-year dividend was 62% of headline earnings, and the company can maintain payouts at a minimum of 40%, despite the challenges, CFO Craig Miller said.

“We’ve got a very solid balance sheet to be able to withstand some of these challenges and continue to invest in the business to maintain our asset integrity,” the CFO said on a conference call.