Implats has ‘little appetite’ for extension of RBPlat deal
● Impala Platinum (Implats), which operates platinum group metals (PGM) mines in SA, Zimbabwe and Canada, said its bid for majority control of JSE platinum junior Royal Bafokeng Platinum (RBPlat) is “time sensitive” and should be prioritised.
CEO Nico Muller said on Thursday the long-stop closing date for the transaction was at the end of September and the process had to be expedited.
The long-stop date refers to the time frame in which all conditions precedent need to be fulfilled in a deal.
“We have little appetite for extensions. It is important there is a definitive closure on this transaction on an urgent basis,” he said.
Muller said the transaction was contested because rival Northam Platinum was also eyeing majority control over RBPlat after acquiring significant shares in the entity from Royal Bafokeng Holdings in November.
Implats also launched its proposed acquisition of RBPlat then, offering its shareholders R90 cash and 0.3 Implats shares per RBPlat share. At the end of June Implats held 37.83% in RBPlat.
Muller said stakeholders including labour and the community supported the deal and this was echoed by the framework agreement signed with minister of trade, industry and competition Ebrahim Patel last month.
The Competition Commission gave the green light for the Competition Tribunal to approve the deal. In July Northam was granted limited rights to participate in tribunal hearings.
Business development executive Kirthanya Pillay said the transaction was time sensitive given the R16bn guarantees to the Takeover Regulation Panel and RBPlat being unable to make strategic decisions due to the process.
“They (RBPlat) can continue with day-today management of the business, but in anything beyond that they are limited,” Pillay said.
Northam said last week the acquisition of RBPlat was an important next step for the company given the primary supply of platinum was coming under pressure and demand would remain robust during the next decade.
Implats, which during the SA Investment Conference in February committed to spending R50bn on capital projects over the next five years, reported that overall lower volumes, inflation and production costs surging by 17% during the year to June 2022 weighed on its results.
Implats said the group unit cost of producing 6E platinum had increased to R17,364 an ounce amid the decline in volumes and global inflation, particularly in power, chemicals, steel and other consumables.
“Besides the increase in fatalities from a safety point of view, the increase in unit costs is the most disappointing aspect of our financial results,” Muller told a results presentation on Thursday.
Eight employees were killed at Implats mines during the year to June, with three of them dying in a mudslide in November 2021.
He said group unit costs would rise by between 5% and 11% in 2023 to between R18,200 a 6E PGM ounce to R19,200. Inflation comes as PGM prices are cooling off after record levels, with palladium 31% lower at $1,888 (about R32,668) an ounce.
The group reported a 4% decrease in 6E concentrate production at managed operations to 2.27-million ounces.
It said extended safety stoppages resulting from the increase in fatalities, unstable power supply by Eskom, a strike by the National Union of Metalworkers of SA (Numsa) at operations run by contractors, and community unrest rocked production at Impala Rustenburg.
Impala Canada grappled with an extreme winter storm in April that damaged the Ontario power grid infrastructure and resulted in an eight-day power outage at the mining operation.
Muller said the company was investigating whether there were any discrepancies between contractors and the company’s labour, and how to close the gap after Numsa led contract employees on a strike in June.
“Numsa has had internal issues and was looking for new terrain, so it saw a soft underbelly in the mining industry, even with the contractors. The question is why that area? It is my contention that ... discrepancies in remuneration generally between contractor firms and mine employees present an opportunity for opportunistic unions to exploit that and promise equal pay,” Muller said.
In Canada, Implats offered a 10% wage increase across the labour force to retain skilled staff.
“In Canada, for example, there is a massive skills shortage, so to attract and retain skilled staff, because we are competing with forestry and industrial complexes, we had to spend a lot of money on recruitment that all contributed to the significant increase in costs,” said Muller.
Implats’s dividend for the year was R15.75 a share, down from R22 a share a year earlier.
It delivered R10.6bn in free cash flow, a 37% decrease from the previous year, while profit fell to R15.6bn from R25.2bn a year earlier.