JOHANNESBURG – Auditing firm PricewaterhouseCoopers (PwC) has revealed that the country’s ailing mining companies wrote down a hefty R46billion in assets value in 2018, more than double the previous year’s impairments as the precious metals and gold sectors continued to struggle.
PwC said its annual survey on the well-being of JSE-listed mining stocks yesterday showed that the industry recorded nearly R200bn in losses in the past five years, with gold and platinum group metals claiming the lion’s share.
PwC Assurance Partner Andries Rossouw said, however, the firm did not think there would be massive impairments next year.
“We hope they have cleaned their cupboards. On the platinum side, it depends a lot on what happens with shaft closures. The gold side is where we are concerned. If gold stays at these levels, with an increasing cost base, there might be more impairments,” he said.
Impala Platinum, the world’s second-biggest platinum producer, widened losses in the year ended June 2018 on the back of a R13bn impairment.
Impala started a major restructuring to close five mines near Rustenburg, and cut up to 13 000 jobs over the next few years as it removes unprofitable ounces from its production.
Michal Kotzé, PwC Africa Energy Utilities & Resources Leader, said it remained to be seen whether business and government could more effectively work towards a more stable mining environment following the gazetting of the new version of the mining charter last month.
The charter requires that new licence holders have 30 percent black ownership. An added requirement is that of carried interest, which means shares are issued to qualifying employees and host communities at no cost to them, and free of any encumbrance.
The cost for the carried interest shall be recovered by a right holder from development of the assets.
The previous charter underlined the regulatory uncertainty, but the appointment of a new minister of mineral resources in February 2018 brought hope of open dialogue and more certainty to the industry.
Gwede Mantashe replaced the controversial Mosebenzi Zwane as Minister of Mineral Resources.
Kotzé described 2018 as a mixed bag of performance for South Africa’s mining industry, with bulk commodity prices continuing to rise during 2018 from the lows at the beginning of 2016, while precious metals continued to struggle.
“Cost-saving initiatives could not offset the impact of input cost inflation. The increased costs and production challenges meant a weakening in operating results. Together with the gold and platinum impairments, it meant that the industry recorded a loss for 2018,” he said.