Implats in bid to save R1bn with costs plan
Beating low platinum prices
CHIEF executive of Impala Platinum Nico Muller yesterday unveiled a plan to improve total operating costs by more than R1 billion cumulatively over the 2019 and 2020 financial years.
The plan means that between July 2018 and June 2020 the company will do more than cut costs – it will apply measures to improve the total cash cost in a bid to mitigate against the impact of the low platinum price environment.
The announcement was made during a media briefing on the company’s half-year results to December in which it swung to a R733 million profit from a R139m loss in the prior period.
Impala, the world’s second-biggest platinum producer, which operates both in South Africa and Zimbabwe, had identified the R1bn improvement as part of its ongoing strategic review, which was announced last September.
Muller said the strategic review which comprised a review of all the business units, overhead costs and shafts still had a long way to go.
“From all the cost-cutting exercises, we will probably cut out R1bn between 2019 and 2020, that is on the back of the labour reduction and a number of other initiatives, including suspending development of some shafts. If we operate on the assumption that the current price environment will continue to prevail, we need to go a lot further,” said Muller.
Implats said it had shed 1 400 jobs as part of a restructuring process and expected to make R350m in annual savings.
It reported a R193m profit before tax, compared to the pretax loss of R238m.
It also said the higher “additional profits tax” payable by Zimplats increased the tax charge period-on-period by R250m, which was largely responsible for the R164m loss after tax.
There was no interim dividend. The last time shareholders received a dividend was in 2013.
Wayne McCurrie, an analyst from Ashburton Investments, said Impala posted good gross profit of R733m versus loss of R139m in the last period.
“Special Zimbabwe tax of R250m has distorted the results. Most importantly, a strategic review is under way. They have excellent assets in Zimbabwe and poor high cost in South Africa’s Impala lease area,” he said.
Tons milled increased by 7.4 percent to 9.9 million tons. The increased volumes were supported by higher deliveries from third party toll refining customers, yielding a 13.3 percent increase in platinum concentrate to 867 800 ounces.