Anglo American pumps more into platinum unit

27th Jul 2009 14:14

Mining giant Anglo American has bumped up its lending to subsidiary Anglo Platinum by more than half to £1.6bn to cover a sharp drop in metal prices.Anglo, which owns 80% of the platinum business, raised its committed facility to AngloPlats by R7.1bn (£555m) in the six months ended 30 June to R20.6bn (£1.6bn).It's thought AngloPlats should be able to operate within the level of its facilities for the next twelve months."The group is currently reviewing its funding needs and facilities with the aim of restructuring its existing borrowings," it said, with Anglo American's backing.Net debt at the end of period grew to R18bn (£1.4bn) from R 13.5bn (£1.1bn) at the end of 2008 and just R6bn (£461m) a year earlier.AngloPlats expects net debt to keep rising as "margins remain depressed and funding of capital projects continues". "Cost management initiatives and the suspension of production areas where a return to profitability is unlikely in the medium term will maximise margins," it explained."However, until cash flow improves, the board considers it prudent to continue to suspend dividend payments. Anglo Platinum is confident that its current short-term debt facilities are adequate to meet its near-term funding requirements. "Profit before tax for the half-year plunged 76% to R2.8bn (£219m) on net sales revenue down 38% to R17.1bn (£1.3bn).Capital expenditure for the six months of R5.3bn is expected to rise to R9.6bn for the year, some R3.5bn lower than in 2008.