Business Maverick

LABOUR PAINS

Implats may axe up to 3,900 jobs in face of falling PGM prices, rising costs

Implats may axe up to 3,900 jobs in face of falling PGM prices, rising costs
Mined platinum ore in a shaft at the Khuseleka platinum mine. (Photo: Waldo Swiegers / Bloomberg via Getty Images)

Impala Platinum has launched a regulatory process that may see a reduction of up to 3,900 jobs at its Rustenburg, Bafokeng and Marula operations as well as its head office. South Africa’s platinum group metals sector is reeling from collapsing prices, and more lay-offs probably loom across the industry.

Impala Platinum said on Friday that it had launched talks with its stakeholders that could see the elimination of up to 3,900 jobs.

“Platinum group metal (PGM) pricing has declined sharply since the start of 2023, which together with persistent inflationary pressures on input costs has resulted in significant pressure on profitability and cashflow across the entire PGM sector, our operations included,” CEO Nico Muller said in a statement. 

“Global macroeconomic uncertainty and rising geopolitical tensions present additional downside risks to industry sustainability. As a result of these pressures, the group has assessed and revised its business planning parameters and contemplated various measures to optimise operational efficiencies and resources.”

The process being undertaken is known as a “Section 189”, which refers to the section of the Labour Relations Act that regulates such matters. 

Implats said the job cuts would be applied to its Rustenburg and newly acquired Bafokeng operations in North West and its Marula mine in Limpopo, equating to a 9% head-count reduction at those assets. 

The layoffs are white-collar as well as blue-collar, with the corporate office also being targeted for a 30% reduction in costs at the company’s head office.

Section 189 notices do not always translate into the total number of job cuts initially targeted, and in the current social and economic environment, unions are likely to fight the restructuring tooth and nail.

South Africa’s PGM sector is in trouble as prices have collapsed from the record highs they scaled a couple of years ago. 

PGM prices have been undermined by a range of factors, including a sour if slowly brightening global economy, the rise of electric vehicles which do not require the metals, and unexpected trends such as Chinese makers of fibreglass substituting relatively expensive rhodium for relatively cheap platinum in their alloy mix.

Read more in Daily Maverick: On the sly, Chinese chemists have eroded SA’s PGM industry 

Fading prospects for US interest rate cuts in the near future have dealt another blow to the outlook for PGM prices.

Meanwhile, costs have been rising, producing a perfect squeeze on margins.  

Implats is still reeling from the disaster last November that saw 13 of its employees killed when the conveyance cage hoisting them to the surface suddenly reversed into a rapid and fatal descent. That catastrophe and the plunge in prices have made the past few months a bleak period for the company. 

If PGM prices do not rebound soon from current levels, there is a very real prospect of the sector issuing further Section 189 notices in the coming months. In a country with an unemployment rate that is effectively well north of 40% based on its widest definition, that is an ill omen as winter approaches. DM

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