New Implats CEO will be under cosh from the get-go, say analysts

Impala Platinum, the world's second-largest platinum producer, is choosing a new CEO and after a tough year marred by safety issues that resulted in a drop in production, analysts say it is vital that the next CEO delivers on Impala's strategies.

It has been speculated that Jean Nel, former CEO of Sibanye's platinum division, who resigned last month after just seven months at Sibanye, could be the right candidate for the top job at Impala.

Hurbey Geldenhuys, a platinum analyst at Vunani Securities, said Nel would be a good candidate.

Nel is commended for cutting costs swiftly at Aquarius Platinum during a time when commodity prices were dwindling - stopping unsustainable operations. Nel had also integrated the business into Sibanye's portfolio, and helped in its efforts to diversify its minerals portfolio.

An analyst who did not want to be named said although it was still early days in the integration of Aquarius into Sibanye's portfolio, Mimosa, which is jointly owned by Implats and Aquarius, had performed fairly well and Kroondal had recorded a strong quarter despite unprotected strikes and safety stoppages.

Sibanye spokesman James Wellsted said although the full integration of the assets would take two to three years, Nel had done an exemplary job negotiating the Aquarius sale for its shareholders and ensuring that it was integrated into Sibanye, while maintaining an excellent operational performance.

On November 1, when Sibanye finally took full ownership of the Rustenburg mines, Nel resigned as CEO of Sibanye's platinum division.

Impala chairman Mandla Gotsho said at last month's AGM the next CEO would need to be highly qualified, have deep mining experience and strong stakeholder management skills "as the industry needs strong management of unions, communities and workers".

He said three of the five candidates being assessed for the position of CEO were internal. The company's board will announce former CEO Terence Goodlace's successor by the end of the year.

Goodlace, who announced his resignation in May after the company went through a tough time following the deaths of 11 mineworkers, was commended by analysts for having kept the company on an even keel.

Nel is also considered the frontrunner for Goodlace's job because he previously worked for Mimosa mine in Zimbabwe.

Setendra Naidoo, a fund manager at Capricorn, said: "If it does come through, Nel has proven himself a very capable miner and CEO and was key at Aquarius in terms of their cost control efforts during the period he was there."

Geldenhuys said the new CEO would have to "ensure that the Impala Rustenburg operations reach their production targets".

"That would involve the successful commissioning of the two new shafts they are building - 20 shaft and 16 shaft - and ensuring that this is done in a safe way."

Although costs were a priority, 16 shaft at Impala would be the biggest producer of platinum for the company, pushing Impala's production from 630,000 ounces to 830,000 ounces by 2020, Geldenhuys said.

Implats has set a target of 715,000 ounces of platinum for its Rustenburg operation compared with the 630,000 ounces produced last year.

With the platinum price hovering around $900 an ounce, it was important to reassure investors that mining companies could deliver on their promises.

The analyst said it would be difficult to find a suitable replacement and this created uncertainty about whether the new CEO would change strategy and production targets for 2020 or continue investing in Zimbabwe given the economic uncertainty there.

This week Impala announced that subsidiary Zimplats will invest $264-million in developing a new underground mine, Mupani, to replace two of its depleted mines in Zimbabwe.

Zimbabwe's government is putting pressure on mining companies to deliver positive cash flows.