Implats nears first asset disposal as it pumps cash

As Impala Platinum (Implats) nears the exit of its first shaft as part of a two-year restructuring process, the world’s second-largest platinum miner reported a sharp swing to profit.

Implats, which has has benefited from higher prices and improved performances, reported a post-tax profit of R2.5bn for the six months to end-December compared with a R164m loss the year before. Revenue increased to R23.5bn from R17.3bn.

The market has anticipated the improvements in Implats’s performance and its shares have increased by 57% since the start of the year.

The good work done at the Rustenburg mines in returning them to being the key driver of revenue and profit in the business as part of the restructuring could be set back if there was a secondary strike at the mines, said CEO Nico Muller.

The Association of Mineworkers and Construction Union (Amcu) has served notices on 11 mining companies that it would embark on a secondary strike to pressure Sibanye-Stillwater to end a strike at its gold mines.

The Rustenburg mines would lose 4,500oz of metal a day and lose R73m a day in revenue, Muller said.

“It would be devastating at Rustenburg. It would be heartbreaking,” he said, noting that the mines had become the “most prominent revenue contributor in the past six months”.

The strike, which was due to start on Thursday night, was postponed until a Labour Court judge had decided whether to grant an urgent interdict to halt the strike.

Platinum in concentrate from its own operations was flat at 678,000oz, despite the restructuring and the closure of the Number 4 shaft.

Implats cut its workforce by 1,500 people during the six months as it started on its two-year restructuring process at its core Rustenburg mines.

Refined output increased by 11% to 1.59-million ounces of platinum group metals (PGMs), of which 800,000oz were platinum ounces and 464,000oz were palladium, as the company drew down on inventory.

Platinum sales increased by 19% to 773,000oz. There was a 16% improvement in the price for the basket of PGMs the company sold for the year.

Despite the improved prices for PGMs, driven by all metals except platinum, Implats would remain wedded to its strategic plans around restructuring its Rustenburg mines, but timing and options around assets could be tweaked, said Muller.

The plan remains to reduce the number of Rustenburg shafts to six from 11 and have a workforce of 27,000. Platinum production from the Rustenburg mines would fall to 520,000oz from 750,000oz, he said, repeating the strategy he outlined during 2018.

“A disposal and outsourcing process has been initiated on 1 Shaft through solicitation of expressions of interest and is expected to conclude in June 2019,” Muller said.

But no significant player in the market had approached Implats for the mine, but it was likely to be a contracting company that would take over the asset and mine it for Implats.

Meanwhile, Implats has earmarked $264m for the Mupani mine, which replaces the Ngwarati and Rukodzi mines in Zimbabwe. The Mupani mine will be in full production by August 2025.

Implats, which owns 80% of Zimplats, the Sydney-listed company that operates platinum mines in Zimbabwe, said $51m had been spent on the project by the end of December.

seccombea@businesslive.co.za