More mining jobs at stake as Implats mulls restructuring of loss-making shafts
|Published
IMPALA Platinum (Implats) could halt operations at some of its South African platinum mining shafts if turnaround efforts falter in the face of plummeting prices of the metal.
This as the industry has already announced a recent spate of job cuts at rival operators such as Sibanye-Stillwater and Anglo American Platinum (Amplats).
Implats also operates in Zimbabwe and Canada, but it is the South African operations that have been in sharp focus, especially after the company presided over a fall in profitability over the interim period to the end of December despite higher production and sales.
Implats is investing in Zimbabwe replacement capacity, but CEO Nico Muller said yesterday that some of the South African operations could either be placed on care and maintenance or suspended if restructuring efforts failed as the company attempted to cut costs and save capital.
“From 2025 to 2027 we are looking at a reduction of 14% of aspired production both at existing as well as planned increases in production,” Muller said at a briefing of the company’s half-year results to December yesterday.
Amplats said earlier this month that a restructuring of its South African platinum group (PGM) operations could affect as many as 3 700 employees, there were fears that more workers could also be laid off under Implats’ restructuring programme. However, Muller could not disclose the number of employees that were likely to be affected by this process.
“We can’t put numbers to that as we are in the early stages of detailing restructuring at operations. (We) have no option but to consider either (moving the operations onto) care and maintenance or suspension of operations,” he said.
Market analyst Simon Brown told Business Report yesterday that it was “most likely the loss making shafts” from Implats that would be shut down first. Sibanye-Stillwater has followed a similar route, asking employees to operate at break even to avoid the complete shutdown of some PGM shafts.
“Its a tough decision but there is greater need to protect cash and to retain the value of the company. There is no option; an evaluation will be made and worse performing shafts will be the ones affected,” said a PGM industry executive yesterday.
There was consensus among analysts that Implats had performed poorly as a result of the persistently low PGM prices.
Roy Topol, a portfolio manager at Cratos Asset Management, said the company’s “results did not look good as expected”, while Brown also said “the tough results posted by the company are all about weak PGM prices” during the half year period under review.
The company said PGM prices were currently “heavily influenced by industrial destocking and weak investor sentiment” although “market deficits for each of platinum, palladium and rhodium are expected” for this year.
Implats skipped payment of an interim dividend after headline earnings fell 77% to R3.3 billion and headline earnings per share plunged 78% to R3.65 a share.
This was despite a 25% creep up in revenues to R43.4bn attained against the backdrop of lower sales costs that sank 2% to R40bn. Shares in the company traded nearly unchanged in yesterday’s afternoon trade session, inching up by 0.29% to R65.
PGM production for the company rose 18% to 1.9 million ounces while refined and saleable production firmed up by 19% to 1.75 million ounces.
“The group reported a free cash outflow of R4.8bn after capital investment of R6.8bn at its managed operations and ended the period with net cash after debt of R5.2bn and liquidity headroom of R16.7bn,” Implats said.
After the acquisition of Royal Bafokeng Platinum (RBPlat) last year, Implats’ attributable mineral resource estimate has now increased by 28% to 336.2 million 6E ounces. However, the 75 million 6E ounces included from RBPlat were marginally offset by 1.5 million ounces in production depletion across group operations during the period.
Attributable mineral reserves closed the half year period under review at 63.4 million ounces, about 21% higher compared to the same measure as at the end of June last year.
BUSINESS REPORT