JOHANNESBURG - Impala Platinum Holdings Ltd. is aiming to stem losses at its biggest operation by 2019 as the South African company adjusts to what may be a “new normal” of low platinum prices.
The world’s second-largest platinum producer may close or sell some part of the “large and intricate” Rustenburg mining complex and increase spending on new shafts to R2.2 billion over the next five years, the Johannesburg-based company said in a statement Thursday.
The company will assess each shaft and production area at Rustenburg to ensure it can make money after the platinum price fell by almost a third over the past three years. Outlook for demand is hampered by the growth of battery-powered electric vehicles, which don’t need the metal’s emissions-reducing properties.
“It is clear that we cannot accept it being business as usual” for the Rustenburg operations, the company said. “A comprehensive strategic review of this operation is planned to
ensure that it will operate at a cash-neutral level in what is perceived to be the new normal pricing environment.”
Like rivals Anglo American Platinum Ltd. and Lonmin Plc, Impala has been struggling to cut costs quick enough to cope with the low platinum price and a strengthening South African rand, which pushes up expenses.
In addition, Impala has been battling to fix inefficient working practices and absenteeism at Rustenburg.
Rustenburg will produce 680,000 ounces to 720,000 ounces of platinum in this financial year, compared with 654,000 ounces in the 12 months through June, the company said.
That will rise to 750,000 ounces by 2022, which is a reduction from previous targets of as much as 800,000 ounces.
Impala needs a further 700 million rand over the amount raised in a 2015 financing to complete the new shafts and will fund the spending from its existing budgets, said Financial Director Brenda Berlin.
Impala reported a so-called headline loss, which excludes one-time items, of 1.37 rand a share for the financial year ended June 30, compared with a 0.12 rand a share profit a year earlier.
Revenue rose 2.5% to R36.8 billion.
Impala fell 3.3% to R38.07 a share by 10:42 a.m. in Johannesburg, extending this year’s decline to 11%.