Beneficiaries of the booming commodities market
Commodity prices spiked over the last year and most operating miners managed to deliver exceptional growth as demand for precious metals increased.
Anglo American Platinum Limited (AMS)
The diversified commodity company reported earnings before interest, taxes, depreciation, and amortization (EBITDA) of R63 Billion in its 2021 interim results.
Rhodium and palladium reached new all-time highs with platinum hitting a six-year high above $1 300 per ounce. Soaring commodity prices saw the platinum group metal (PGM) basket increase to $2 884 per PMG ounce which is a 47% Year-over-Year (YOY) increase.
"Given the value distribution to other stakeholders, our strong balance sheet, robust market outlook and confidence in the underlying cash generation of the business, we have declared first-half dividends, consisting of both a base dividend and special dividend, amounting to R46.4 billion, R175 per share or a 100% payout ratio of headline earnings," - Natascha Viljoen (Anglo American Platinum CEO).
Anglo American Platinum’s gross dividend of R175 per share from profits accumulated over the six months ended the 30th of June 2021 consists of the following:
- R70 per share which represents the base dividend that equals 40% of the headline earnings and an R105 per share special cash dividend equal to 60% of headline earnings as an additional dividend.
The payment date for the Dividends will be on 16 August 2021 with the last day to trade to qualify for dividends being the 10th of August 202.
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Anglo American PLC (AGL)
Anglo America PLC announced that it will be returning an additional $2 Billion to shareholders, split between special dividends of $1 billion and a share buyback program of $1 Billion.
This comes after the strong market and strong resilience delivered an underlying EBITDA of $12 Billion and declaration of a $2.1 billion in dividends.
Mark Cutifani, Chief Executive of Anglo American, said: "We entered this period of strong demand and prices for many of our products with a strong balance sheet and we are therefore in a position to deliver both the investment in our sequence of margin-enhancing growth projects and also return excess cash to our shareholders.“ Cutifani furthermore added that the additional $2 Billion is a demonstration of the capital discipline applied and confidence of the board in the company.
Anglo American PLC will be paying an R25.34 dividend plus a special dividend of R11.85 to its shareholders. The last trading date to qualify for dividends will be 17 August 2021 followed by the payment date on 27 September 2021.
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Kumba Iron Ore Limited (KIO)
Alongside other commodities, Iron ore and steel prices soared during the calendar year 2020 (CY20) reaching a record high into CY21 beating expectations. Kumba Iron Ore, a unit of Anglo American is set to reward its shareholders with more than R23 billion in dividends. This will be a record payout that equals 100% of its earnings, or R72.70 per share. This was an astounding 178% higher than the headline earnings the miner posted for the same period in 2020.
Themba Mkhwanazi, Chief Executive of Kumba said, “Despite logistical constraints and weather disruptions, we delivered a strong operational and financial performance, with production increasing by 12% to 20.4Mt. Our high-quality products, combined with a constructive iron ore market, resulted in an exceptional EBITDA of R44.4 billion, enabling us to announce an interim cash dividend of R72.70 per share.”
- The total dividend pay-out will be R72.70 per shares representing R54.58 ordinary dividends & R18.12 top-up cash dividend. The dividends pay outcomes after the red-hot commodity cycle, which was supported by the global economy recovery from the meltdown in 2020.
Investors can expect their Kumba dividends to be paid on the 23rd of August 2021 with the last trading date to qualify for the dividends being the 17th of August 2021.
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Round-Up
Investing in mining companies has always been considered one of the best ways to create wealth in the long term. While dividend pay-outs may be of benefit to existing shareholders; also remember that dividends payout may not always be on the table. Investors should take note that companies may at times reinvest profits to expansion rather than reward their investors with a dividend distribution.
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Sources – EasyResearch, JSE Sens, Kumba Iron Ore Limited, Anglo American PLC, American Platinum Limited, Business Maverick
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