[miningmx] — UNCERTAIN times in the platinum industry have forced Impala
Platinum (Implats) to rein in capital expenditure, but the company said it would not
cut back production in the foreseeable future.
The group on Thursday released annual results for the period to end-June, reporting
a 40% decrease in gross profit to R6.9bn, and 37% lower net profit at R4.3bn, as
lower platinum prices and a six-week labour-related work stoppage at Rustenburg
Mines ate into the company’s margins.
Implats declared final dividend of 60c per share, bringing 2012’s total dividend at
195c, down from 570c in 2011. Annual production decreased by 21% to 1.45 million
ounces and was partly responsible for a 24% increase in unit costs to R13,450 per
ounce.
Platinum producers’ margins have in recent months come under pressure from a
higher cost base and lower PGM prices on the back of dampened demand for these
metals.
Implats has suffered another setback, stemming from labour unrest at its
Rustenburg operations, where dissatisfaction over wages and a rivalry between the
dominant National Union of Mineworkers (NUM) and upcoming Association of Mining
and Construction Union (Amcu) spilled over into a violent six-week work outage
during the first quarter of the year.
Some producers, such as Aquarius Platinum, have already scaled back production
and closed unprofitable shafts while Anglo American Platinum (Amplats) said it
would complete a full review of all its operations before the end of the year.
Implats’ newly appointed CEO Terence Goodlace said on Thursday that although the
profitability of the group’s operations was continually being assessed, the group was
seeking to rather increase production in order to lower unit costs.
He didn’t give specific output guidance for 2013, but said production would be kept
steady at all the group’s operations, with the exception being Rustenburg (750,000
oz in 2012) where it was seeking to add the 80,000 to 100,000 ounces it lost during
the strike. This implies guidance for 2013 of around 1.55 million ounces.
Asked whether the company was still aiming for its 2014 target of 2 million ounces
per annum, Goodlace said the risk to achieving that was “certainly more towards the
downside’.
Also, Goodlace said Implats has already implemented “cash-preservation strategies’
to weather the economic downturn, including a reduction of capital expenditure from
R7.3bn in 2012 to around R6bn for the new financial year.
Speaking about the labour problems facing Implats and the other producers
operating in the Rustenburg area, Goodlace said Implats has already adjusted the
contentious salaries of rock drill operators to between R10,000 and R12,000 per
month in the wake of the six-week strike. He said the company is in the middle of a
process to audit union membership numbers at Rustenburg, but that it proved
difficult to get Amcu and NUM around a table for discussions. In the meantime, the
group has established an “interim workers’ committee’ to deal with grievances, with
Goodlace describing labour relations as “relatively stable’ for the time being.
