JOHANNESBURG – Impala Platinum (Implats) has impaired R13.6 billion at its Impala Rustenburg subsidiary in the North West in the year to June 2018, as it continues with a restructuring process that will last until 2020.
The world’s second-biggest platinum producer said yesterday that its losses for the period rose to a hefty R10.8bn after a tax loss mainly on the back of the restructuring. Last year Implats impaired R10bn and reviewed its assets in the province.
The massive losses come despite the group saying that its unit costs were in check, increasing marginally to R22 931 per platinum ounce from R22 838 as a result of R1bn saving from various initiatives.
Chief executive Nico Muller said the restructuring was a step towards curbing the over-supply of platinum in a low-price environment.
“We view it as our responsibility not to support the loss-making ounces,” Muller said, adding that the platinum price had been driven by sentiment and not market fundamentals.
He said the company was exploring various options to the restructuring including selling assets.
“We are not saying we will close the shafts at all costs,” he said. “There are options, including disposals as opposed to placing the mines on care and maintenance.”
Muller said the disposals would be conducted in a responsible manner.
Last month Implats received backlash from the government and labour unions after announcng the restructuring of Rustenburg, which would see its mines being cut from 11 to six and 13 000 jobs slashed in the next two years.
Yesterday the group said that it was also planning to reduce production from the previously guided 750 000 platinum ounces to 520 000 platinum ounces a year.
It said its Marula mine had improved significantly, posting a R47 million gross profit during the period from a gross loss of R586m in 2017.
The mine also experienced a massive decline in community protests and disruptions following intervention by the Department of Mineral Resources, the group said.
Implats forecast refined platinum production of between 1.5 and 1.6 million ounces in the next financial year.
It said revenue for the year declined 3 percent to R35.9bn from R36.8bn, despite higher rand basket prices, impacted by lower sales volumes. The lower sales volumes resulted in a negative variance of R3bn as about 77 000 additional platinum ounces were built up in process stock in the year.
The company reported declared a $65m (R976.4m) dividend from Zimplats, in Zimbabwe.
Implats said Waterberg, where it owns a 15 percent stake, represented a large-scale platinum group metals (PGM) resource with an attractive risk profile, given its shallow nature and high palladium content.
It said this would facilitate fully mechanised production with the potential for the project to have among the lowest operating costs in the PGM sector.
Seleho Tsatsi, an investment analyst at Anchor Capital, said the cost performance was good, but the operating environment for PGMs remained weak.
“The outlook for platinum remains challenging” said Tsatsi. He said that the restructuring was necessary.
“The platinum market needs excess supply to be removed from the market. Impala itself is pointing to the platinum market being in surplus. Removing high-cost production from the market is really the only way to rectify this,” he said.