Anglo American, what to do about Amplats?

The WSJ reported on Friday afternoon, Anglo Struggles to Extract Itself From Deep Hole. The story is short, but it highlights what we have said all along, the Brazilian iron ore project (which was supposed to have started already) is not turning out the way that the business wanted. As we understand it, Carroll brought the project to the board. And if that is the case, when the project eventually comes online in a couple of years time, at what cost? And where will the price be? When will the price of iron ore be at that time? And what will the demand picture look like? The more burning questions are closer to home however, what will Anglo American do with their stake in Anglo American Platinum? As the article points out, only two percent of Anglo American EBIT is contributed by Amplats. But as much as 25 percent of the parents value is made up by the number one platinum producer.

Meanwhile the problems persist at Amplats operations, the company is still hit by no shows. The company is threatening legal action against their employees. There are more reports on the wires that suggest that there are more talks around wages today. Whilst I agree that the jobs that the rock drill operators do are very dangerous, how much should that skill set get paid? Seemingly nursing is a dangerous job too, but in order to qualify for the profession, nurses have to study post school. I stumbled across this list: Average years of schooling of adults (most recent) by country. The USA is top of the list, with 12 years. That is the average. We are in 50th place, with 6.1 years. I was amazed that Portugal is less than us. But richer, for historic reason. Our 6.1 years average adult education is below the global average of 6.2 years. If we want to earn more, we should earn the right to earn more. By furthering our own educations.

I wonder what implications this is going to have in South Africa, the higher wage settlements in the mining sector. I suspect that we will see this spread to other parts of the economy, which could mean that retail could continue to do well. We are of course all watching this very closely.