* Move will cut over half of Amplats workforce
* CEO says would prefer to sell assets in one go
* Company is focusing on more mechanised operations
* Amplats lost over 400,000 ounces to 5-month strike
(Adds additional CEO comments)
By Ed Stoddard and Zandi Shabalala
JOHANNESBURG, July 21 World number-one platinum
producer Anglo American Platinum is to sell a swathe of
its most labour-intensive South African mines after a five-month
strike shattered its hopes of ever making them profitable.
The mines account for over half of the company's workforce
but only a quarter of production and their viability was dealt a
blow when miners won pay increases of up to 20 percent. Amplats
said it would now focus on its more mechanised mines.
For the miners who faced hardship in their campaign for
better pay, a sale could increase the risk of future lay-offs.
The buyers are likely to be companies with a focus on
deep-level, labour-intensive mines, which may have more appetite
than Amplats for the challenge of making them commercially
One of the biggest hurdles will be stiff opposition to any
job cuts from unions and politicians. South Africa's National
Union of Mineworkers (NUM) condemned the plan to sell the mines.
"Any sale is going to result in job losses and this is a
punishment for poor workers," its general secretary, Frans
Baleni, told Reuters on Monday.
Amplats said it was selling its Union mine, its operations
at Rustenburg and South African joint venture Pandora, calling
them "good long-life assets".
Ascribing a value to those assets in the shorter term
appeared to present a challenge for analysts, faced with
uncertainty over platinum prices and the risk that future
attempts to cut costs at the mines will further inflame labour
Amplats' Rustenburg operations employ around 20,000 people
while Union has about 7,000, representing over half of the
company's head count. The potential for fresh unrest is great as
the NUM loses members to the more hardline Association of
Mineworkers and Construction Union (AMCU), which oversaw the
strike, the longest in the history of South Africa's platinum
Some analysts have said the Rustenburg mines and the Union
mine could be worth between $1 billion and $2 billion, but
others were more pessimistic.
Excluding the joint ventures Pandora and Bokoni, "we value
the combination at a negative $800 million, hence simply giving
the assets away would be deemed a result", said Nomura analysts.
Citibank said Union was worth 12 billion rand, but it saw
Rustenburg as a liability that would drag down the value of the
overall assets by around 14 billion rand.
"We view the potential sale of these as positive, but
already reflected in Amplats' share price," it said.
Amplats shares were up 4.6 percent in late trading in
"NOT A FIRE SALE"
Griffith said a number of potential suitors had expressed
interest and insisted at an interim results presentation that
"this is not a fire sale."
He said the company had not been forced to sell because of
the strike and had been repositioning in favour of less
labour-intensive activities for some time.
But the stoppage has clearly forced its hand due to the
heavy losses in production.
Amplats parent Anglo American had already signaled
its intention to reduce its troubled platinum portfolio.
Anglo American is trying to achieve a return on capital
employed (ROCE) of at least 15 percent by 2016. In 2013 the
figure was 11 percent, with Amplats at only 2.7 percent.
Platinum miners have been struggling in the face of
depressed prices for the precious metal, used for
emissions-capping catalytic converters in automobiles.
A buyer would inherit a three-year wage agreement with the
hard-line AMCU union. But it would also secure annual production
of around 600,000 ounces, or a quarter of Amplats' capacity.
The apparent front-runner is Sibanye Gold, whose
Chief Executive Neal Froneman told Reuters this month he wanted
a platinum deal before the end of the year and could easily
raise $1 billion to seal one.
Sibanye was itself spun off from Gold Fields as a
vehicle to manage its labour-intensive South African operations
so that Gold Fields could focus on mechanised mining.
Sibanye also has Chinese investors, bringing it a cheap
potential source of funding. Another Chinese-backed company,
Wesizwe Platinum, has also said it was looking at
buying further assets in the sector.
Amplats lost over 420,000 ounces to the strike, which also
affected rivals Impala Platinum and Lonmin.
It said first-half headline earnings dropped to 60 cents per
share, a fall of almost 90 percent.
Explaining the decision to sell the mines in an interview,
Griffith told Reuters that Amplats had limited capital to spend
and needed to allocate it wisely.
"We can't do everything," he said. "In many companies'
hands, owning Rustenburg and Union would be way better than the
assets they have. They would spend the money and give it the
love and attention it needs."
He said the company's preference was to sell the Rustenburg
operations - which it had effectively consolidated into three
mines from five - and Union as a single package.
"But we do realise that it's a big cheque," he said, so the
second option would be separate sales or, thirdly, a stock
($1 = 10.6256 South African Rand)
(Additional reporting by Silvia Antonioli in London; editing by