Implats battens down spending

IMPALA Platinum Holdings (Implats) will sell mines, close shafts and reduce capital spending as it expects prices to remain low until the second half of 2016.

While the company planned R30 billion of capital expenditure that included completing two new shafts over the next five years, it would reduce capital expenditure (capex) by R2.2bn to R4.5bn in 2016, and would lower 2015 spending by R1.3bn, it said yesterday.

Implats would seek to sell its Marula mine in northern Limpopo within six months, chief financial officer Brenda Berlin said.

The price of platinum, used in catalytic converters to curb harmful emissions from vehicles and for jewellery, is at a five-year low as users turn to excess above-ground stocks to supplement supply shortfalls since 2012.

Implats’ Rustenburg operation, the largest platinum-mining complex, shut down for five months due to a strike that ended on June 24, and took half a year to return to normal production, adding to lower sales.

“The above-ground stocks for us is still a very, very big thing,” chief executive Terence Goodlace said.

“Our estimate is that you’ve probably got two, two-and-ahalf years to run still. That’s why we’ve assumed lower for longer,” he said.

Platinum for immediate delivery fell to $1 155.50 (R13 244.50) an ounce on February 24, the lowest since July 2009. Implats expected prices to remain close to this level until the middle of 2016, Goodlace said.

The Rustenburg complex, which contributed 45 percent to Implats’ output in the 2013 financial year, the last reporting period when operations were not disrupted by labour walkouts, would be downscaled to a nine-shaft mine from 14 by 2020, including the two new shafts it was building, Goodlace said.

Mining crews at the affected shafts would be transferred to the new operations, he said.

The new 16 and 20 shaft complexes would enable the mine to produce 850 000 refined platinum ounces annually by 2019 from 709 200 ounces in the 2013 financial year, the company said.

While Implats’ cash of R2.7bn to December was enough to see it through for the year to June, the company might be forced to seek finance should prices remain low, Goodlace said.

Implats fell as much as 3 percent before closing 1.89 percent lower at R74.32 in Johannesburg.

Earnings excluding onetime items were R400m, or 66c a share in the six months to December.

Platinum for immediate delivery fell to $1 155.50 an ounce on February 24, the lowest since 2009.