Im­plats warns of job cuts as it tack­les un­prof­itable shafts

Business Day - - FRONT PAGE - Al­lan Sec­combe Re­sources Writer

Im­pala Plat­inum (Im­plats), the world’s sec­ond-largest pro­ducer of the metal, is head­ing for tur­bu­lent times as it cuts jobs and tack­les its un­prof­itable Rustenburg mines, the big­gest con­trib­u­tor to group pro­duc­tion and a ma­jor fac­tor to its full-year loss.

Im­plats is the lat­est min­ing com­pany to tackle its un­prof­itable old shafts and fol­lows An­gloGold Ashanti and Sibanye Still­wa­ter, which are prepar­ing to close decades-old shafts, and the clo­sure of Bokoni plat­inum mine jointly owned by At­latsa Re­sources and An­glo Amer­i­can Plat­inum (Am­plats), cut­ting a to­tal of 20,000 jobs.

The South African min­ing in­dus­try has cut 70,000 jobs in the past five years.

Given the po­lit­i­cal back­lash from the gov­ern­ment and unions when Am­plats un­veiled job cuts of 14,000 peo­ple four years ago, with threats made by then min­eral re­sources min­is­ter Su­san Sha­bangu against the com­pany’s min­ing rights, Im­plats has al­ready started talk­ing to the gov­ern­ment and unions be­fore un­veil­ing its plans.

Im­plats could start by shed­ding up to 4,000 po­si­tions, keep­ing the num­ber rel­a­tively low to avoid a back­lash, and then pro­gres­sively re­duc­ing the head­count un­til the com­pany reached a sus­tain­ably prof­itable level of pro­duc­tion of about 550,000oz from the Rustenburg mines, said Ned­bank an­a­lyst Leon Ester­huizen.

The scale of job cuts is not yet known, but the R2.7bn loss in­curred at the Rustenburg mines had forced an in­evitable re­struc­tur­ing as the Im­plats board re­garded the con­tin­ued low plat­inum price as the new nor­mal, new CEO Nico Muller said. The job cuts process is ex­pected to start in the next few weeks.

Im­plats recorded a taxed loss of R8.1bn for the year to endJune, com­pared with a R43m loss the year be­fore.

A R10.2bn im­pair­ment against pay­ments to the Bafo­keng was one of the driv­ers of the loss. Its shares were among the worst per­form­ers on Thurs­day, fall­ing 7%.

The Rustenburg mines were sched­uled to pro­duce 830,000oz of plat­inum from 2020 as the com­pany brought two new shafts into pro­duc­tion. But the new plan ex­pects the Rustenburg mines to pro­duce 750,000oz in 2022 be­cause of the ear­lier clo­sure of old shafts and de­lays to the new 16 and 20 shafts, which need an ad­di­tional R700m over five years to com­plete them.

The Rustenburg shafts — 90% of which are un­prof­itable — have been or­gan­ised into three groups, with the old mines set to be har­vested or mined with no fur­ther cap­i­tal in­vest­ment over the next two years be­fore be­ing shut.

These four old shafts will con­trib­ute 100,000oz in the cur­rent fi­nan­cial year be­fore drop­ping to 50,000oz from then on.

Un­der Muller, who was ap­pointed five months ago, the un­prof­itable and un­der­per­form­ing Marula mine was put on no­tice that if at­tempts to fix the prob­lems, in­clud­ing cut­ting 980 jobs and stop­ping two un­der­ground ar­eas, were not ef­fec­tive, the mine would be shut. The mine will be mon­i­tored quar­terly.

A sim­i­larly hard-nosed at­ti­tude was voiced by Muller for the Mi­mosa mine, shared with Sibanye in Zim­babwe, where the gov­ern­ment will in­tro­duce a 15% levy on con­cen­trate ex­ports out of the coun­try from 2018.

The in­ten­tion is to force com­pa­nies to im­prove the value of the met­als leav­ing the coun­try by at least smelt­ing them.

Im­plats, through its 87%-held sub­sidiary Zim­plats, had con­ducted a study into build­ing a smelter and the fi­nan­cial con­se­quences of the levy, and Mi­mosa would be closed if ei­ther de­ci­sion was forced on the mine, Muller said.

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