New broom in place to sweep Im­plats decks

Business Day - - THE BOTTOM LINE -

If ever there was a time for world num­ber two plat­inum miner Im­pala Plat­inum (Im­plats) to make the changes it so des­per­ately needs at its mines around Rustenburg, it is now, un­der the new lead­er­ship brought by CEO Nico Muller.

Muller has a lot to prove in tak­ing the role at a time when two-thirds of SA’s plat­inum mines are un­prof­itable. He re­ferred to the Har­mony Gold op­er­at­ing model of yesteryear, of go­ing into old mines and har­vest­ing them for profit. That will be part of the plan for Im­plats, squeez­ing the last prof­itable ounce out of old shafts, pos­si­bly us­ing con­trac­tors.

This would leave man­age­ment able to in­ten­sify its fo­cus on op­er­at­ing and pro­duc­tiv­ity im­prove­ments at the ma­ture shafts in its un­prof­itable Im­pala Rustenburg min­ing area and on ramp­ing up the new 16 and 20 shafts and bring­ing 14 shaft back to full pro­duc­tion af­ter a fire.

Muller and his team are en­gaged with the unions and the De­part­ment of Min­eral Re­sources about these plans, which are highly likely to en­tail job losses and shaft clo­sures.

Re­struc­tur­ing and job losses are a po­lit­i­cal night­mare for any com­pany, par­tic­u­larly in an en­vi­ron­ment in which about 20,000 job cuts have al­ready been un­veiled in the gold and plat­inum sec­tor.

But, for the good of the com­pany, they have to be done.

Muller is talk­ing about adding shal­low, mech­a­nised out­put to the group. This is the holy grail of plat­inum min­ing and such as­sets are ex­pen­sive and tough to find. It could be that Im­plats, through its 87%-held Zim­plats sub­sidiary, makes an­other in­vest­ment in Zim­babwe or looks closer to home on the North­ern Limb of the Bushveld Ig­neous Com­plex, where An­glo Amer­i­can Plat­inum has the fab­u­lously prof­itable Mo­galak­wena open­cast mine.

Through no fault of their own — or even their cus­tomers — banks are ex­pected to ex­pe­ri­ence an in­crease in non­per­form­ing loans as a per­cent­age of loans by the end of 2018.

Rat­ings agency Moody’s, in ex­plain­ing its de­ci­sion to keep its neg­a­tive out­look on SA’s bank­ing sys­tem this week, said this ra­tio would rise to 3.5% of to­tal loans, from 2.9% in De­cem­ber 2016. This will re­verse an im­prove­ment be­tween 2015 and 2016, when soured loans de­clined 5.2%. The re­ver­sal is ex­pected to be­gin in 2017, with early signs ob­served in May, when the sec­tor re­ported an in­crease in non­per­form­ing loans be­tween De­cem­ber and May, as cus­tomers came un­der pres­sure from the re­ces­sion in the first quar­ter.

The is­sue isn’t that cus­tomers are tak­ing on loans they aren’t able to re­pay — credit ex­ten­sion has slowed to its low­est level in five years — but that ris­ing un­em­ploy­ment and a sput­ter­ing econ­omy have made pre­vi­ously cred­it­wor­thy cus­tomers risky for bankers.

The Bank­ing As­so­ci­a­tion SA didn’t mince words in re­act­ing to Moody’s de­ci­sion: “Banks’ prospects are tied to those of the econ­omy. The weak econ­omy in which South African banks op­er­ate is a func­tion of the weak lead­er­ship of the cur­rent gov­ern­ment and the cli­mate of pol­icy un­cer­tainty that reigns in al­most ev­ery sec­tor.”

It is time for the gov­ern­ment to wake up. Fail­ing to come up with con­crete plans to deal with ail­ing state-owned en­ter­prises and, in­stead, choos­ing to pro­tect their cor­rupt ex­ec­u­tives is se­verely af­fect­ing or­di­nary peo­ple who can­not pay the over­due in­stal­ments on their cars.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.