Craig Miller: Navigating the Challenges of Anglo American Platinum

Craig Miller, the CEO of Anglo American Platinum (Amplats), stands at the helm of one of the world’s leading producers of platinum group metals (PGMs). As the industry faces a myriad of challenges, including fluctuating prices and supply constraints, Miller’s leadership is pivotal in steering the company through these turbulent waters. His recent interactions with investors, particularly during a US roadshow, shed light on the current state of the PGM market and the strategic decisions that lie ahead for Amplats.

The Investor Perspective

During a recent roadshow, a US investor posed a thought-provoking question: could South Africa’s PGM miners collaborate to regulate supply? Miller acknowledged the complexity of such an arrangement, particularly in the context of the US market. This inquiry underscores a growing interest from international investors in the PGM sector, especially as the strategic value of these metals becomes increasingly recognized in the wake of the electric vehicle (EV) revolution.

The demand for PGMs—primarily platinum, palladium, and rhodium—has surged as industries pivot towards cleaner technologies. Following Anglo American’s R7.2 billion bookbuild in Amplats shares, US shareholders have emerged as the third-largest group of investors, trailing only South African institutions and Anglo American itself. This shift highlights a burgeoning confidence in the PGM market, despite the current price challenges.

The Price Conundrum

One of the most pressing issues facing the PGM industry is the depressed state of metal prices, particularly when physical supply deficits are becoming apparent. For instance, while Impala Platinum (Implats) reports a full order book with customers, spot prices remain stubbornly low, with palladium down 2.2% this year. Despite a brief recovery in September, palladium prices linger below $1,100 per ounce, posing significant challenges for North American production.

The PGM market is relatively small and illiquid, with total supply forecasted at approximately 7.09 million ounces for the year, including recycling. This figure pales in comparison to the combined production of the world’s two largest gold producers, highlighting the unique dynamics of the PGM sector. The inability of miners to cut supply significantly due to the impact on unit costs further complicates the situation, as does the anticipated supply deficit.

Industry Constraints and Future Prospects

Miller’s insights reflect a broader concern within the industry regarding the feasibility of new PGM projects in South Africa. Industry leaders, including Implats CEO Nico Muller, have expressed skepticism about the likelihood of new investments in PGM production, citing the current price environment as a deterrent. Paul Dunne of Northam Platinum echoes this sentiment, warning that the existing prices diminish the incentive for new mines, leading to inevitable resource depletion.

The financial health of the PGM sector has also come under scrutiny. According to a report by PwC, the industry’s net cash-to-EBITDA ratio has deteriorated significantly, indicating increasing stress on balance sheets. As prices remain depressed, the need for drastic measures to preserve financial integrity becomes more pressing.

Refining Capacity: A Bottleneck

Another critical challenge facing the PGM industry is the shortage of refining capacity. Even if prices were to improve, the ability of miners to meet demand could be hampered by bottlenecks in base metal refining. PwC estimates that total PGM concentrate supply in South Africa is around 13.75 million ounces, but the refining capacity is insufficient to handle this volume effectively.

This refining constraint has implications for major projects, such as the Platreef expansion by Ivanhoe Mines. The first phase of this project is already facing processing challenges, and the proposed second phase appears increasingly unlikely. Similarly, the Waterberg joint venture, a significant palladium-dominant project, is also grappling with refining capacity issues, despite Implats holding a 15% stake and a right of first refusal on concentrate.

The Road Ahead

Despite the myriad challenges, Miller remains optimistic about the future of Anglo American Platinum and the PGM sector as a whole. The industry’s reliance on demand—particularly from the hybrid vehicle market and hydrogen technology—will play a crucial role in determining the long-term viability of PGMs. As the world transitions towards greener technologies, the demand for these metals may stabilize, providing a more reliable market for producers.

In conclusion, Craig Miller’s leadership at Anglo American Platinum is characterized by a keen awareness of the challenges facing the PGM industry. As the market navigates price volatility, supply constraints, and refining bottlenecks, Miller’s strategic decisions will be instrumental in shaping the future of Amplats and the broader PGM landscape. The coming years will undoubtedly test the resilience of the industry, but with a focus on innovation and collaboration, there remains potential for growth and recovery in this vital sector.