Business Maverick

SOUTH AFRICA

Implats posts record earnings as PGM good times keep on rolling

Implats posts record earnings as PGM good times keep on rolling

Impala Platinum is the latest precious metals producer to post stellar results amid the pandemic. For producers of platinum group metals and gold, 2020 has been a glittering year.

South Africa has uranium deposits, but it was the platinum group metals (PGMs) sector just a few short years ago that was radioactive to many investors. Five years ago, about 70% of the shafts in the sector were lossmaking, waylaid by depressed prices, soaring costs and frequent spasms of violent labour and social unrest. 

That was clearly an unsustainable path. Just look at what happened to Lonmin, which eventually collapsed under the weight of its losses and the stain of Marikana, only to be gobbled up by Sibanye-Stillwater.

The sector’s fortunes have since had a dramatic turnaround. Productivity improvements, including mechanisation in some cases, have helped. Rising wage costs have also been contained. More recently, surging prices, notably for palladium, the key catalyst in petrol engines, have flown to the bottom line of PGM producers. And a weaker rand has also helped the cause of commodity exporters.

Impala Platinum (Implats) on Thursday unveiled its full-year results and they were stellar. Headline earnings surged more than fivefold to over R16-billion. Dividends have been reinstated, with R4.2-billion to be paid out to shareholders. This was despite a slight decline in production to 2.8 million ounces.

“The progress made in the strategic repositioning of Implats over the past several years enabled the group to successfully navigate the challenges created by the unprecedented external shock of the Covid-19 pandemic,” said CEO Nico Muller, an unassuming but highly regarded executive who has been spearheading the company’s turnaround.

Bright spots include the company’s Rustenburg operations, long the group problem child that was lossmaking and a flashpoint of labour turbulence. Large-scale layoffs were once on the cards there. But “gains in safety and efficiency” at the complex have seen upward revisions in its planned production profile, “negating the need for large-scale retrenchments”, the company said.

Another success story has been the company’s Marula mine, which faced potential closure a few years ago because of social unrest and protests around the operation linked to a community empowerment project with tribal authorities that had gone sour.

“The operational turnaround and renewed social stability at Marula was sustained, yielding substantial financial value,” Implats said.

The glow from South Africa’s PGM sector is no longer radioactive. BM/DM

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