The CEO of Impala Platinum (Implats), the second-biggest producer in South Africa, said competition regulations do not allow for cartel arrangements among local precious metal miners — which have taken a knock from low prices — to cut production and manipulate prices back in their favour.
Nico Muller said the industry as a price taker was not allowed to influence the market, unlike members of Opec, which are allowed to slash production to push prices up.
“Let us assume Implats acts as a responsible citizen and we cut production; one way or another unit costs are going to go up. It means the competitors will have a better position. We are not in a position where we can sit around a cigar table and agree like the Opec guys on a cut in production to rebalance the market. It is the difference between being a single company and an industry (player).”
As a result, he said, there would likely be no new mines in South Africa due to the hit platinum is taking, caused by, among other things, demand for electric cars globally.
“I think it is highly improbable you are going to see material investment in new platinum group metals (PGM) production assets in South Africa, in particular, if you don’t have beneficiation capacity. I don’t think our industry has faced this long-term risk”.
He said that building new mines takes anything between 10 and 20 years.
“You are talking roughly 10 years. That is the period where there is long-term concern about electrification. I am not convinced any shareholder or company is going to see a clear and attractive shareholder return for development in new assets,” he said.
The miner also wants to review a closed-shop agreement at its Bafokeng Rasimone mine where a breakaway of the National Union of Mineworkers (NUM) is fighting for recognition.
Lee-Ann Samuel, group executive for people, said the company had experienced unrest at the mine and was now in discussions with NUM to allow for the recognition of other unions.
“We are in talks with NUM about that. It relates to a faction of NUM that has broken away. For now, we are trying to navigate this terrain, we are aware other groupings are trying to seek recognition, we are looking at what opportunities within the prescripts of the law allow us to engage other labour unions”.
We are in talks with NUM about that. It relates to a faction of NUM that has broken away. For now, we are trying to navigate this terrain, we are aware other groupings are trying to seek recognition, we are looking at what opportunities within the prescripts of the law allow us to engage other labour unions
Implats earlier this year placed the Merensky expansion at its Two Rivers mine in Burgersfort, Limpopo — which it jointly operates with African Rainbow Minerals — on hold. It is slowing down the Marula Phase 2 extension project and is lowering costs by focusing only on high-grade ore in Canada.
It also completed a restructuring process across all operations during the year under review, resulting in a 4,200 headcount reduction.
Johan Theron, spokesperson for the group, said he doesn’t think companies will rush production back in the lower price environment.
“You would have to be certain that the markets and the planets had aligned.”
Lower dollar prices for the precious metal resulted in a 38%, or R40bn, reduction in revenue for Implats for the year, while lower-achieved rhodium and palladium prices resulted in a R25bn and R14.4bn decline in revenue, respectively. Group revenue fell 19% to R86.4bn and profit tumbled R5.5bn from R22.3bn a year earlier. Headline earnings fell 88% to R2.4bn, or 269c per share, which was 87% and 88% lower than a year earlier. Impairments for the year resulted in a posttax charge of R19.8bn.
The group reported 19 fatalities in the year under review, with the highest deaths recorded at shaft 11 at Implats Rustenburg which claimed 13 lives in November.
Muller said the 19 fatalities were the worst on record for the company and several safety leadership summits were held to align leaders with a vision of no or minimal fatalities.
“For us with 19 fatalities in one year albeit 13 fatalities are associated with one event is critical. I think it is the worst-performing year from a fatality point of view.”
After the accident in November, Implats conducted an in-loco inspection a month later, followed by further investigations and repairs to damaged infrastructure. It said a report of its investigation was submitted to the department of mineral resources & energy in January, paving the way for formal proceedings relating to the incident, which are expected to take several months.
Muller said the miner would wait for the conclusion of any inquest before releasing details on the investigation.
“We are possibly heading for an inquiry. It is our view the entire world will benefit from the findings and recommendations from this.”
