Impala Platinum (Implats) confirmed on Tuesday that a targeted voluntary separation process with its employees was under way, joining its peer group Sibanye-Stillwater in reviewing their cost base as the plunge in metal prices strained cash flows.
Implats accounts for about 20% of global primary platinum group metals output every year and oversees about 70,000 employees across SA, Zimbabwe and Canada.
“We have experienced a drastic reduction in metal prices and have to critically assess and adjust the finance and operating strategy at each operation to ensure it remains cash flow positive and sustainable,” spokesperson Johan Theron told Business Day without giving precise details.
“We are living in uncertain times. We have to work with today’s reality. If we don’t adjust and act fast, we will be out of business. It’s a sequential process of acting fast, and protects the business and jobs.”
The news of voluntary job cuts first reported by Reuters came just more than a week after Implats said it would implement a comprehensive operational response to prevailing market dynamics.
The platinum miner started the process at its head office in October and is now extending the exit packages to its sprawling Rustenburg mining complex in North West province.
The price for palladium has plunged nearly 40% so far in 2023 while platinum is down 14%. Demand for palladium in particular has been hit by weakening demand in China.
“The basket price is not recovering quick enough and the rand has strengthened recently, putting further pressure on the rand basket price. Unless we see a recovery in the basket soon, more jobs could be at risk,” said Greg Katzenellenbogen, a senior portfolio manager at Sanlam Private Wealth.
RMB Morgan Stanley analysts have said platinum miners need to adjust to lower prices for longer.
In the longer term, demand for the metals used in catalysts that curb vehicle emissions is threatened by the rise in the use of electric vehicles (EVs).
Sibanye-Stillwater said in October that it plans to cut more than 4,000 jobs and close some of its old platinum mining shafts that are running out of commercially viable ore. Anglo American said last month that it is weighing job cuts at its head offices in SA and across the globe in a bid to save costs.
“As a union, we are very concerned about the potential job losses in the platinum and gold sectors,” said National Union of Mineworkers spokesperson Livhuwani Mammburu. “One member supports close to 10 family members, which means the impact is far reaching.
“Sibanye in particular has been retrenching thousands of workers in the gold sector every year since 2013, save for 2021.”
Implats shares were down 5% to R82.35 in late trade on the JSE, bringing year-to-date losses to 61%, according to Infront data. Other PGM stocks were also weaker on the day, with Anglo American Platinum losing 4.40% to R665.
Coronation, one of SA’s largest asset managers with more than R600bn in assets under custody, last month said it has disinvested from the PGM sector, casting doubt over the long-term prospects of an industry that employs nearly 200,000 people.
The asset manager said given its view on the long-term outlook for PGM markets, it believes the companies should be decommissioning mines and shutting projects.
Stats SA data shows the mining industry employed 514,859 people in 2019. Out of every 100 workers in the mining industry, 39 are employed in the PGM sector, 21 in the coal sector and 20 in the gold sector.
With Reuters
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