Impala Platinum consolidates operations to secure long-term profitability

Impala Platinum Holdings (Implats) is merging the operations of two subsidiaries, Impala Bafokeng Resources (IBR) and Impala Platinum, due to the low prevailing rand platinum group metal (PGM) pricing.

In a statement on Tuesday, Implats said the move was also necessary to secure the long-term sustainability of both Impala and IBR. Meanwhile, market analysts believe PGM prices should improve in the second half of this year. 

“This consolidation will align the legal structure with current reporting lines in place and facilitate and progress the realisation of synergies between the two operations,” Implats directors said.

It was expected that, over time, the consolidation will improve profitability and ensure the sustainability of the combined operations, “which shall be ongoing and continuous,” they said.

There was no cash consideration attributable to the consolidation, nor would Implats shareholders, or shareholders of Impala or IBR change due to the consolidation. The change also did not involve any related parties to the Implats group, the statement said.

In terms of the actual transaction, Impala and IBR entered into an agreement for IBR to transfer its entire business comprising the exploration, development, and mining of PGMs and activities, including all its assets and liabilities, to Impala as a going concern, after IBR and other Implats companies had implemented certain re-organisational steps relating to the businesses prior to the consolidation.

An online search shows IBR operates two active mines — Bafokeng Rasimone Platinum Mine (BRPM) and Styldrift Mine — and two concentrators that process ore. It has a site under care and maintenance, the Maseve Mine, which was acquired in 2018.

Impala Platinum’s existing operations include Impala Rustenburg, Marula Platinum, Zimplats, and Impala Canada.

Implats’ share price gained 1.2% to R160.84 Tuesday afternoon, adding to the gains of more than 85% in the mining group’s share price over a year.

Meanwhile, Mining Weekly reported on Monday that refinery services provider Heraeus had found in its latest precious metals appraisal that the platinum price, which averages $1,341/oz, will likely correct over the second half of the year, based on rising demand from China, and the South African PGM basket was currently more than 30% higher than at the start of the year, in dollar terms.

“For high-cost producers, this will ease pressure on profit margins which have been eroded over the past 18 months as PGM prices have fallen and production costs have risen.”

Platinum prices had risen to an 11-year high last week, the specialist mining publication reported.

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