Jobs in the embattled platinum sector are in further peril after Impala Platinum (Implats) said nearly 4,000 jobs are on the line across its operations as the sector battles low prices and a surge in costs.
Implats said on Friday it had begun consulting labour in a process that could cause it to let go of 3,900 workers — or 9% of workers across the company’s Rustenburg, Impala Bafokeng and Marula operations.
The mining house said the process would also result in a 30% reduction in head office costs.
Implats CEO Nico Muller said the plunge in platinum group metal (PGM) prices since the start of 2023 and cost increases had forced the group to revise its business planning parameters.
“Cost-saving, capital-deferment and voluntary labour-reduction initiatives to date have not sufficiently offset the impact of persistently lower prices. This has significantly undermined Implats’ financial position, which in turn threatens future job security for the entire workforce,” Muller said.
“It must be emphasised that Implats is committed to a fair and transparent consultation process. No final decision has been taken regarding the proposed restructuring, and no final decision will be taken before full and proper consultation with affected employees and their representatives in compliance with the Labour Relations Act. During the consultation process, all viable alternatives suggested to [mitigate] job losses will be considered.”
News of the restructuring comes just months after the group reported a 78% slump in half-year headline earnings per share.
The restructuring announced by Implats means more than 8,000 jobs are at risk in the industry, with 2,600 jobs already lost at Sibanye-Stillwater’s SA platinum operations.
Reviewing contracts
Anglo American Platinum (Amplats) outlined plans in February to cut 3,700 jobs in SA in a bid to reduce costs by R5bn in a low price environment.
Amplats is also reviewing the contracts of 620 service providers, which could mean more people will lose their jobs.
Amplats recently reported a 71% plunge in profit, due largely to a 35% decline in the PGMs dollar basket price during the 2023 financial year.
Bakubung Platinum Mine said in November nearly 600 jobs were on the chopping block, a move that would wipe out most of its 761 staff complement.
Job losses in the sector follow a sharp drop in the prices of PGMs, which are primarily used in the exhausts of petrol and diesel vehicles.
SA, the world’s biggest platinum producer, is bearing the brunt of a plunge in PGM prices over the past year.
Platinum futures peaked at $1,300 in 2021, but now hover at about $923.
The palladium price continued to fall from the record level seen in 2022, dropping 39% during 2023 from $1,793/oz to $1,104/oz, while the rhodium price also continued to decline, falling 64% from $12,250/oz to $4,425/oz.
PGM producers have responded to this downturn by increasingly focusing on cost-saving measures and cutting capital budgets as margins become tighter.
In its annual report released on Friday, Sibanye warned that further restructuring is on the cards should PGM prices not recover.
Further restructuring
Sibanye’s chair, Vincent Maphai, and CEO Neal Froneman said in a joint letter to shareholders that the “precipitous” decline in PGM prices had “materially” affected the group’s profitability.
“We recognise however that if low commodity prices persist and with ongoing inflationary cost pressures, there may be further restructuring required. This may include further repositioning to address losses at the US PGM operations and the Sandouville refinery,” reads the note.
“We have a strong balance sheet as a buffer but will continue to manage our business to ensure sustainability.”
The two backed PGM prices to eventually come good. Maphai and Froneman said the developing hydrogen economy was also likely to support demand for PGMs in the future.
They pointed to a recent announcement by the European Commission of about €7bn in funding for more than 30 hydrogen projects as one example about their upbeat outlook for PGM prices.
“We maintain a consistent view that PGMs have substantial longevity in automotive applications, especially through the emergence of hybrid vehicles. This view is partly informed by our analysis on the outlook for battery-electric vehicles (BEVs) and the market fundamentals of the battery metals, which will be critical for the growth in BEV production,” they said.
“We forecast supply deficits relative to current market BEV growth forecasts as vehicle electrification accelerates into the second half of the decade, with the development of new projects unable to meet projected demand from 2026. We expect this to result in slower BEV growth than forecast, with demand for ICE [internal combustion engine] vehicles and PGMs being sustained for longer.”
Sibanye, which recently reported a R37bn annual loss for the year ended December 2023, aims to cut about 4,000 employees and contractors at its SA gold operations, taking the overall tally of jobs on the line in the broader mining industry to nearly 14,000.
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