Impala Platinum (Implats) said on Thursday that it had to defer refining of 38,000 ounces of platinum group metals (PGMs) mined at its SA operations due to so-called load-curtailment.
It also estimates that the impact of power cuts on efficiency, while difficult to measure, could have been almost as large.
As a result, group refined production of 1.48-million PGM ounces, including saleable production from Impala Canada, for the six months to end-December was 9% lower than in the previous matching period. Smelting capacity was also constrained by the scheduled rebuild of one if its furnaces in Rustenburg, which began in late November 2022.
The company ended the period with about 140,000 ounces of excess inventory.
Load-curtailment involves consumers of large amounts of electricity to reduce their usage on request from Eskom. The system has four levels, which require users to decrease consumption by 10%-20%. When SA moves to state 6 load-shedding, mines are moved to load-curtailment level 4, which is a 20% cut in load.
Implats CEO Nico Muller said the macroeconomic and operating environment was “typified by high inflation and intensified utility-level power constraints in SA”. But load-curtailment has a limited direct impact on mined volumes.
Muller said they experienced a rising trend in load-curtailment towards the end of the reporting period and at the start of this year.
“We have seen an escalation in requirement for load-curtailment. If this trend continues we are at the cusp of seeing a much more material impact from load-curtailment,” Muller said.
He said that for energy-intensive manufacturing if present levels of load-curtailment continue for the next six months it would not be uncommon to see production fall about 10%.
However, for the six months to end-December the group’s financial performance was supported by robust rand-based PGM pricing, with revenue per 6E ounce sold increasing by 5% to R38,117/oz.
Headline earnings and headline earnings per share varied only slightly from the previous year at R14.0bn (+1%) and R16.54 (-2%), respectively.
Revenue growth was 3.9%, though the gross profit was down 4.2% after total cash operating costs increased by 15%.
The group will pay an interim dividend of R4.20 per share, amounting to R3.6bn, down 20% on the payout declared a year earlier.
Due to the poor performance of Eskom’s ageing coal-fired generation fleet, a maintenance shutdown at Koeberg nuclear power station, and serious faults at Kusile power station, SA has not had a single day without load-shedding in 2023.
RBPlat deal
Implats launched a takeover bid for Royal Bafokeng Platinum (RBPlat) in November 2021. But the deal was delayed by a cumbersome regulatory approvals process and, more recently, by a competing bid from rival platinum miner Northam. In November 2022, Northam put in a formal bid for RBPlat after months of hinting at the possibility.
As previously reported by Business Day, in an offer that values RBPlat at about R50bn, Northam offered R172.70 a share in cash and shares for the company, topping a R150 (cash and shares) per share open-ended offer by Implats.
On Thursday, Muller expressed frustration at the many delays the group faced in the acquisition process. But, he said, Implats was still “very serious to get to a position of control” over RBPlat.
Implats owns about 40.71% of RBPlat and Northam’s share stands at about 38%.
Much will depend on the decision to be made by the Public Investment Corporation (PIC), which holds more than 9% of RBPlat.
Muller said they expected to receive a decision from the PIC within the next six weeks.
However, to complete the acquisition, they also still needed to get a compliance certificate from the Takeover and Regulation Panel (TRP), which reports to the department of trade, industry & competition. Objections filed by Northam delayed this process.
Muller said that because SA law allows for appeals and escalation through various stages of litigation it could take years to get the certificate.
He said frustration they experienced with this process is for him one of the factors in SA not being rated an attractive investment destination.
“It is impossible to conclude a transaction in SA because we have regulatory bodies that make it impossible for the [transaction] to come to a conclusion.”
In terms of what this might mean for their acquisition plans, Muller said once they have the PIC’s decision they “will execute what in our view represents the best option”.
“This cannot continue for longer we have been busy with this since November 2021 and it must come to an end.”
Updated: March 2 2023
This story has been updated with new information throughout
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