Implats cautions against headwinds, tempers output forecast
The miner says its profitable run continues, but warns against a number of potential difficulties in the final quarter of its financial year as it cautions investors to temper annual production outlook
Impala Platinum (Implats), the world’s second-largest miner of the metal, cautioned investors to temper their outlooks for full-year production because of a number of potential headwinds in coming months.
Implats said in an outlook for the balance of its financial year to end-June that it was undertaking “extensive” planned maintenance of one of its furnaces, closing or selling its Number 1 shaft, starting wage talks and trying to prevent further disruptions from Eskom blackouts.
All this was happening in the run-up to the national elections on May 8, which could unsettle communities around its operations in Rustenburg and in Limpopo, where its Marula mine already lost a week of production because of a community protest in the March quarter.
For Implats, as with other platinum miners, its wage talks are due to start in June, mainly with the Association of Mineworkers and Construction Union (Amcu), which recently emerged from a violent and protracted strike of five months at Sibanye-Stillwater’s gold mines with nothing to show for it.
Amcu has been warned by the department of labour that its registration could be terminated and it had 60 days in which to motivate why it should remain a registered union. This will add a layer of uncertainty and tension to the wage talks.
Platinum companies negotiate wages directly with their unions rather than collectively, as the gold industry does. All major platinum companies, which supply about 4.5-million ounces of the world’s 6-million ounces of annual supply, are holding wage talks in June.
Implats advised investors that its production would trend towards the lower end of its forecast range of between 1.5-million and 1.6-million ounces of platinum for the 2019 financial year because of these headwinds and potential disruptions.
“Metal prices for our primary products remain buoyant, allowing us to sustain profitability in financial year 2019, year to date,” Implats CEO Nico Muller said, referring to the surge in palladium and rhodium prices.
“Along with the rest of SA we were faced with interruptions to our operations caused by Eskom power disruptions: while we could manage this at Impala Rustenburg due to the flexibility offered by our integrated mining and processing operations, our other South African operations elsewhere fared less well,” he said.
In the March quarter, Implats reported its best safety record, with no fatalities at its operations and its lowest rate of injuries, marking a renewed focus and mining discipline brought to the group’s assets, particularly at the flagship Rustenburg operations under the leadership of Mark Munroe.
Refined platinum output for the March quarter increased 5% to 333,000oz compared to the same period a year earlier. However, the closure of the Number 3 furnace for planned maintenance meant the stockpiles of concentrate Implats has were not reduced.
Implats said the stockpiles, worth R4.75bn, would be processed and sold during the 2020 financial year.
In the nine-month period, Implats refined 1.13-million ounces of platinum, a 9% increase over the same period a year earlier. This number included its mined production as well as third-party material sourced through its Impala Refining Services (IRS) business.
The Number 3 furnace will be recommissioned soon and be back at full production during May, Implats said, adding it would then close its furnace at its Zimbabwean subsidiary Zimplats in June for scheduled maintenance.