Implats says PGM fundamentals are intact despite volatility

Impala Platinum (Implats), which is in talks to acquire rival Royal Bafokeng Platinum, says the fundamentals of platinum group metals (PGMs) remain intact despite recent market volatility.

Releasing its production update for the September quarter, CEO Nico Muller said on Friday that Implats’ absolute pricing for its products remains “robust”.  

PGM prices appear to have stabilised after dropping substantially since June, driven mainly by global shortages of computer chips, which are crucial in the production of vehicles.

The prices of platinum, palladium and rhodium, which are primarily used to clean the emissions of internal combustion engines, recovered broadly in October though they are still below the peak reached during the first half of 2021.

Rhodium shot up to a record high of $29,800/oz in March, before coming off to $11,250 in September and then recovering to current levels of $14,100.

“PGM markets are experiencing heightened volatility due to global macroeconomic factors and supply chain constraints impacting automotive production,” Muller said. “However, at Implats we continue to benefit from robust absolute pricing for our products. The sustained demand from our customer base is indicative of the strong underlying fundamentals for PGMs.”

Implats and other miners have been in the sweet spot throughout the duration of the Covid-19 pandemic as they reported bumper profits and cash flows amid higher metal prices, which took off in the second half of 2020. Higher commodity prices have also boosted fiscal revenues via higher tax receipts and mining royalties.

However, Implats said refined production volumes declined 15% year on year to 741,000oz in the three months to September, affected by annual processing maintenance carried out during July and August. Sales volumes were broadly steady at 707,000oz.

The share price slipped 4.47% to end at R197.99 on the JSE on Friday after initially slipping to an intraday low of R195.62. However, the Implats share price is still up a whopping 716% over a three-year period.

Meanwhile, investors still await further details on a potential deal in which Implats will acquire Royal Bafokeng Platinum (RBPlat). The proposed transaction, which was announced late in October, is the latest in a consolidation phase that has been led by Sibanye-Stillwater, which took over Lonmin in a R4.3bn deal in 2019.

RBPlat was born out of a joint venture between Anglo American Platinum and Royal Bafokeng Holdings, the investment vehicle for the Royal Bafokeng nation, which held 35.8% of RBPlat at the end of June.

mahlangua@businesslive.co.za