Platinum group metals (PGM) producer Impala Platinum (Implats) has decided to delay several projects as a result of “capital and cost interventions” in response to low metal prices and a decline in earnings for the six months to end-December.
While fundamental demand for its primary products remained robust, the persistence of lower PGM prices required a robust strategic response to ensure the long-term sustainability of the group, CEO Nico Muller said.
“PGM pricing has been negatively affected by a confluence of factors that look set to persist in the medium term,” Muller said.
“We expect 2024 to be a difficult year characterised by anaemic precious metal consumer and investor sentiment as economic and geopolitical uncertainty linger. The group has benefited from some retracement in input pricing escalation; however, inflationary pressures on operating and capital costs have persisted.”
Implats was targeting more than R10bn in savings over the next five years, Muller told journalists on Thursday. This reduced previous guidance on capital expenditure by about 20% from R60bn to R50bn up to 2028.
“At Zimplats (in Zimbabwe), we are planning to save R6.5bn over the next five years with the deferment of the base-metal refinery, as well as the deferment of solar plant installations beyond the first phase of 30MW. In addition, the extension of the Zimplats Mupani mine depletion has now been scheduled to advance at a slower rate of five years instead of four years,” he said.
A further R1.5bn in savings would be realised from the deferment of two projects at Impala Canada — the maintenance of the ore pass system and the new tailings facility required for life-of-mine extension. About R1.2bn in capital expenditure would be deferred at Marula mine in Limpopo with the slowdown of the phase II life-of-mine extension project.
Impala Refineries, which conducted conceptual studies for a combined heat and power project to eliminate coal usage, had deferred the project and delayed implementing phase 4 of its precious metal refinery refurbishment by 24 months, from April 2026 to April 2028 — this would defer about R1bn in capital expenditure.
If there was no improvement in PGM prices within the next six months, the group would also consider further measures which could include temporary shaft closures and staff retrenchments, Muller said.
Since June 2023, Implats had already reduced its workforce by about 3% group-wide, from about 69,900 to 67,900. These jobs, Muller said, were not lost due to restructuring but rather a consequence of a decision taken to stop recruitment for non-critical positions.
Implats was evaluating restructuring at corporate offices as well as all operations across the group and if metal prices did not improve the company would consider restructuring that could include “labour reduction”, as well as reducing overheads.
Muller said if these steps were not enough, Implats would have to consider care-and-maintenance or suspension of some operations.
In its interim results published on Thursday, the group indicated that headline earnings and headline earnings per share both decreased by about 77% compared to the matching period in 2022. Headline earnings per share were down from R16.54 to R3.65, while group revenue fell 25% to R43.4bn. This was despite a 12% increase in sales volumes which benefited from the maiden interim consolidation of Impala Bafokeng. Implats concluded its acquisition of Royal Bafokeng Platinum in 2023.
Earnings for the period decreased primarily due to lower revenue from a 32% lower achieved rand revenue per 6E (gold, iridium, palladium, platinum, rhodium, and ruthenium) ounce sold.
After initially gaining as much as 3.7% by 11.40am, Implats’ share price on the JSE was flat at R64.70. It has lost about 62% of its value over the past 12 months.
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