New broom in place to sweep Implats decks
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.