Impala Platinum may consider closing some loss-making mining shafts in South Africa if metal prices deteriorate further and efforts to restructure some operations don't improve its margins, CEO Nico Muller said.
The Johannesburg-based platinum-group metals producer scrapped an interim dividend and postponed spending on various projects to save about R10bn after a 78% slump in half-year profit.
Impala said it was restructuring its Canadian palladium operations, whose life has been shortened to two to four years from seven years, and will postpone planned spending at various projects in South Africa and units in Zimbabwe.
About 3% of the company's workforce of 69,936 left the company due to natural attrition since June last year and further job reductions may be considered if metal prices don't improve, Muller said.
The decisions to mothball loss-making operations could be made within the next six months, the CEO said.
If ongoing restructuring and cost cuts isn't sufficient “you have no option but to consider either (placing mines on) care and maintenance or suspension of operations,” Muller said.
Prices of platinum, mostly used by automakers to curb toxic emissions from petroleum-powered engines, have fallen. South African producers attribute the slump in demand to weaker economic growth in China as well as destocking by manufacturing who have built up stocks during Russia's invasion of Ukraine.
Impala's South African peer Anglo American Platinum said it plans to cut about 3,700 jobs and has also halted spending on projects after its profit last year plunged by 71%. Sibanye-Stillwater, which has already cut some jobs at its platinum mines, said its 2023 income may plunge by 91%.
The price of palladium declined by 37% last year after surging to more than $3,400 an ounce after Russia's invasion of Ukraine. Rhodium, which soared to almost $30,000 an ounce in 2021, is trading at about $4,000 an ounce.
Impala said most of savings over the next five years would come from projects that are being postponed at its Zimplats and Mimosa units in Zimbabwe, and Marula and Styldrift operations in South Africa.
During previous cycles of lower prices, platinum mining CEOs have been slow to make decisions to cut spending and reduce output, Muller said. This time around loss-making operations would require that the company take some rapid responses, he said.
“I don't think we've got the luxury of taking two years to make these decisions,” Muller said.
Reuters
Impala Platinum weighs closing some loss-making mines as profit slumps
Image: THAPELO MOREBUDI
Impala Platinum may consider closing some loss-making mining shafts in South Africa if metal prices deteriorate further and efforts to restructure some operations don't improve its margins, CEO Nico Muller said.
The Johannesburg-based platinum-group metals producer scrapped an interim dividend and postponed spending on various projects to save about R10bn after a 78% slump in half-year profit.
Impala said it was restructuring its Canadian palladium operations, whose life has been shortened to two to four years from seven years, and will postpone planned spending at various projects in South Africa and units in Zimbabwe.
About 3% of the company's workforce of 69,936 left the company due to natural attrition since June last year and further job reductions may be considered if metal prices don't improve, Muller said.
The decisions to mothball loss-making operations could be made within the next six months, the CEO said.
If ongoing restructuring and cost cuts isn't sufficient “you have no option but to consider either (placing mines on) care and maintenance or suspension of operations,” Muller said.
Prices of platinum, mostly used by automakers to curb toxic emissions from petroleum-powered engines, have fallen. South African producers attribute the slump in demand to weaker economic growth in China as well as destocking by manufacturing who have built up stocks during Russia's invasion of Ukraine.
Impala's South African peer Anglo American Platinum said it plans to cut about 3,700 jobs and has also halted spending on projects after its profit last year plunged by 71%. Sibanye-Stillwater, which has already cut some jobs at its platinum mines, said its 2023 income may plunge by 91%.
The price of palladium declined by 37% last year after surging to more than $3,400 an ounce after Russia's invasion of Ukraine. Rhodium, which soared to almost $30,000 an ounce in 2021, is trading at about $4,000 an ounce.
Impala said most of savings over the next five years would come from projects that are being postponed at its Zimplats and Mimosa units in Zimbabwe, and Marula and Styldrift operations in South Africa.
During previous cycles of lower prices, platinum mining CEOs have been slow to make decisions to cut spending and reduce output, Muller said. This time around loss-making operations would require that the company take some rapid responses, he said.
“I don't think we've got the luxury of taking two years to make these decisions,” Muller said.
Reuters
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Sibanye reduces planned job cuts after deferring shaft closure
Platinum restructuring could cut 4,000-7,000 jobs
Impala Platinum sees 20% decline in half-year profit on lower metal prices
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