Anglo American Platinum (South Africa) Review

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Anglo American Platinum (South Africa) - Strategic Priorities

Some key strategic priorities for Anglo American Platinum (South Africa) in 2020 and beyond include accountable sustainability, building an ethical value chain, and improving air quality in its mines.

Strategic Priorities For Anglo American Platinum 2020 and Beyond

Accountable Sustainability

  • Anglo American Platinum aims to "establish or support the functioning of existing, local stakeholder accountability forums and national multi-stakeholder dialogue groups by 2020." The company notes that it aims to have accountability at each local mine site in terms of its sustainability goals by 2020.
  • In addition, they also aim to establish strategic international partnerships in 2020 to support their sustainability aims and objectives. The company states that all operations will "have a five-year site-level sustainability plan in place by the end of 2020."
  • The company is determined to be a leader in sustainable mining in the industry and this priority was listed as a key priority in its annual report to shareholders and stakeholders.
  • The company is already working towards achieving its sustainability objectives using its FutureSmart Mining™ programme that is being implemented globally and on a company-wide scale. The company's sustainable mining plan in support of the objective was launched in 2018.
  • A key aspect of the company's sustainability goals is ensuring that host communities are thriving. In South Africa, Anglo American Platinum is "building on their decades-long commitment to local enterprise and supplier development in their host communities, for example through their pioneering Zimele programme in South Africa, by assessing development opportunities at regional levels."
  • Also, the company's data shows that they are making progress towards their "2020 water targets of reducing absolute freshwater abstraction by 20% (as compared to the projected business as usual (BAU) consumption), recycling and/or re-using water for 75% of their global water requirements and recording no Level 3 (or above) incidents in the year."

Ethical Value Chain

  • A key priority for Anglo American Platinum in 2020 is to ensure that at least half of its operations are certified to agreed responsible mining certification standards, including their operations in South Africa.
  • The company also aims to achieve an industry-wide responsible sourcing standard in 2020.
  • This is identified as a key priority as it is listed in the company's annual report as a key strategic goal for 2020 and beyond.
  • The company already has a high sourcing standard and is helping small suppliers meet its sourcing standards. Currently, the company is focused on increasing "support for entrepreneurs in communities around operations, with local procurement currently accounting for around 21% of our total expenditure with suppliers."

Improving Air Quality

  • One of the company's key priorities for 2020 is for its Rustenburg Platinum Mines in South Africa to achieve their air quality target by 2020, in compliance with the 2020 MES.
  • This was identified as a key priority because the company identified this as one of its strategic goals in its annual report to stakeholders.
  • "Rustenburg Base Metals Refinery (RBMR) and Precious Metals Refinery (PMR), which are responsible for product delivery and compliance to external requirements, have environmental management systems certified against the new ISO 14001:2015 standard."
  • Currently, the company is on course to achieve the goal as it had already achieved 96% compliance for mining (including in concentrators) as of 2018.
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Anglo American Platinum (South Africa) - Key Projects

Some key projects of the Anglo American Platinum (South Africa) company in 2020 and beyond include its asset discovery projects, the Venetia mine expansion, and energy-efficient projects.

Key Projects

Asset Discovery Projects

  • In South Africa, Anglo American Platinum has a near-asset discovery project that is focused on the extensive mineral tenure around its existing operations in the Mogalakwena PGMs district in South Africa.
  • The project was identified as a key project as it was mentioned as one of the projects the company is embarking on in the company's most recent annual report.
  • The goal of the project is to discover additional "mineral deposits that are capable of delivering sustainable and superior returns on a material scale, and which provide greater optionality for the business."

Venetia Mine Expansion

Energy Efficiency Projects

  • Anglo American Platinum has an energy efficiency target of reducing energy use by 8% in 2020 as against 2016 levels. The company's 2030 target is a 30% reduction in their absolute energy intensity as against their 2016 performance.
  • In 2018, the company invested in "approximately 486 energy-efficiency and business-improvement projects saved 6.7 million GJ in energy consumption, relative to the projected consumption in a BAU scenario (a 6.5% reduction)."
  • This is a key project for the company as identified in its annual report, and the company noted that it intends to keep making investments in energy-efficiency projects to meets its goal.
  • In South Africa, the company announced that "Primus Power will be installing eight EnergyPod battery systems at its Amandelbult mine, in the Limpopo province, South Africa. The eight EnergyPods will provide Amandelbult with 200 kW of power and 1,000 kWh of energy. These batteries are charged when demand for, and cost of grid electricity, is low."
  • The company states that it intends to invest in similar energy-efficient projects in South Africa to help it achieve its 2020 sustainability goals and beyond.
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Anglo American Platinum (South Africa) - Consulting Support Needs

Some areas where Anglo American Platinum (South Africa) will most probably need change management or strategy consulting support include achieving its sustainability goals, handling regulatory challenges, attracting young mining engineering talent, and handling mining residues.

Achieving its Sustainability Goals

  • Anglo American Platinum states that in 2020, each of their "operating managed sites will be required to have a five-year plan towards meeting our sustainability stretch goals and other objectives."
  • The company is working assiduously to meet its sustainability goals and may need strategy consulting at its local mines to achieve this and to ensure that their standards are in line with industry best practices.
  • This includes not just helping the company achieve its sustainability goals but also providing consultation on how the company's local suppliers can meet the company's sustainability sourcing standards.

Handling Regulatory Challenges

  • Anglo American Platinum is currently having challenges with the South African mining regulatory agency and the relationship between the two parties is currently at an all-time low, according to Norman Mbazima the head of Anglo American’s assets in South Africa.
  • The company complained of "damage caused by poor and inconsistent policy-making" and a key part of the challenge is the newly proposed mining charter that has been challenged in court by key players in the mining industry.
  • This is one area where the company is likely to be open to strategy consulting support on a way to break the impasse.

Handling Mining Residues and Winning Talent

  • One of the key challenges facing Anglo American Platinum is the handling of mine waste rock disposal, water dam safety, and mineral residue management (especially tailings).
  • According to the company, "tailings management is becoming an ever-bigger challenge for the mining industry. Ore grades are generally declining — as the best-known deposits are steadily being depleted — causing us to need more ore to yield the same amount of metals and minerals. This results in increased tailings production which needs larger tailings storage facilities and taller dams to contain them."
  • To combat the challenges, the company needs improved technology, excellent operation management strategy, and a way to keep attracting young talents into mining engineering, a profession that currently has image issues.
  • These are all areas where the company is likely to be open to change management and strategy consulting as the issue is central to its competitiveness and for achieving its FutureSmart Mining objectives.
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Anglo American Platinum (South Africa) - Developments

Some key developments that Anglo American Platinum (South Africa) has recently completed include portfolio upgrade, FutureSmart Mining™ initiative, and some Collaborative Regional Development projects.

Completed Developments in South Africa

Portfolio Upgrades

  • Anglo American Platinum completed the sale of the New Largo thermal coal project in South Africa.
  • They also completed the sale of "the Eskom-tied domestic thermal coal operations, PGMs’ 33% interest in the Bafokeng Rasimone Platinum Mine associate, as well as its 11% listed stake in Royal Bafokeng Platinum, its 85% interest in Union mine and 50.1% interest in Masa Chrome Company."
  • They also completed the acquisition of "the remaining 50% interest in the Mototolo joint operation in South Africa from Glencore and Kagiso Platinum Ventures." The acquisition was completed in November 2018 and is now fully owned by the company.
  • The above were selected as key developments because they were highlighted in the company's annual report.

FutureSmart Mining™ Initiative

  • Anglo American Platinum has designed a blueprint that will guide its overall mining operation globally, including in South Africa and it is termed FutureSmart Mining™.
  • FutureSmart Mining™ is an innovation-led approach to sustainable mining. The goal of the project is to ensure that, through technical expertise and innovation, the company delivers net-positive benefits to the environment and host community while continuing to supply the world's growing demand for precious metals and minerals.
  • The company has already designed the strategy and it currently underpins all that the company does and is continually being applied in all its operations in South Africa and beyond.
  • FutureSmart Mining™ is a key development for Anglo American Platinum because it is at the heart of all the company's initiatives and mining effort now and for the future.
  • A key aspect of FutureSmart Mining™ is to develop waterless mines in water-scarce regions. And the first step towards the goal is for each of the company's site "to complete a site-wide water balance, providing a more accurate and detailed understanding of water withdrawals, use, efficiency, discharge, consumption, storage and conveyance, and which underpins the effective assessment and evaluation of site-specific water risks."
  • The water balancing project has already been completed in the Limpopo province in South Africa,

Collaborative Regional Development Project

  • The Collaborative Regional Development project is about identifying socioeconomic development opportunities with the greatest potential in a region through spatial planning and analysis.
  • One such project that has been started in South Africa is the Garden Heroes project.
  • The Garden Heroes project is about encouraging schools and their students to grow their food on site. "The project is part of the National Schools Nutrition Programme, the objective of which is to feed disadvantaged school children whilst educating them about nutrition and income-generating opportunities."
  • They have also handed over a number of completed Social and Labour Plan (SLP) initiatives in communities around "Der Brochen mining projects. The initiatives include the construction of a primary school, renovations of schools, road development, building of a primary healthcare clinic, and two farming projects."
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Insights and Trends - Global Platinum and Palladium Market

Some trends in the global platinum and palladium market include a decline in the demand for platinum, increased demand for palladium, and increased sustainability demand and goals.

Decline in Platinum Demand

Sustainability Awareness

  • Sustainability is a key trend in the global platinum and palladium market as more miners try to adopt sustainable practices and environmentally friendly regulation, increasing demand for platinum and palladium.
  • According to analysts, "the progressive enforcement of Euro 6c and Euro 6d-TEMP legislation has been positive for palladium loading on gasoline vehicles. Euro 6c imposes a mandatory particle number (PN) limit for gasoline direct injection (GDI) engines, while Euro 6d-TEMP extends emissions compliance for PN and NOx from the laboratory to the real world, via ‘real driving emissions’ (RDE) testing using portable emissions measurement equipment."
  • Palladium and rhodium are the current catalytic material of choice in an increasingly emissions-conscious age and as such are seeing increasing demands. The demand has caused the price of palladium and rhodium to increase by 40% and 84% respectively since January 2018, and by 117% and 310% over two years since January 2017.
  • Miners are also adopting more sustainable practices and launching various initiatives to minimize water and energy use during mining.
  • Examples of companies leading in this trend are Anglo Platinum through its FutureSmart Mining initiatives and Impala Platinum through its sustainability programs.

Increased Recycling

  • There has been an increase in the recycling of platinum and palladium market.
  • Between 2016 and 2018, recycled platinum increased from 736,000 ounces to 776,000 ounces, while recycled palladium increased from 2,491,00 to 3,212,000 in the same period.
  • According to analysts, "independent recycling booths are now present in most major jewelry retailing areas, enabling consumers to sell their old jewelry for cash. This metal is processed at local refineries and may subsequently be purchased by jewelry manufacturers, many of whom are sourcing an increasing percentage of their metal requirements from scrap."
  • Chinese companies are examples of companies adopting this trend.

Research Strategy

To determine trends in the global platinum and palladium market, our research team analyzed market reports and corporate reports on the market and selected trends that appear in most of the market research reports and articles we analyzed.