Impala Platinum considers mine closures after profit slump

The Johannesburg-based producer of platinum group metals (PGMs) scrapped an interim dividend and postponed spending on various projects to save about 10 billion rand ($519.5 million) after its half-year profit slumped to 1.7 billion rand from 14.8 billion rand in the same period of 2022.

Impala said it was restructuring its Canadian palladium operations, the life of which has been shortened to between two and four years, down from seven years, and will postpone planned spending at various projects in South Africa and Zimbabwe.

About 3% of the company’s workforce of 69,936 has left through natural attrition since June last year and further job reductions could be considered if metal prices do not improve, Muller said.

Decisions to mothball loss-making operations could be made within the next six months, the CEO added.

If ongoing restructuring and cost cuts are not 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 – have fallen, with producers citing weaker economic growth in China and destocking by manufacturers who built up stocks during Russia’s invasion of Ukraine.

Impala’s South African peer Anglo American Platinum plans to cut about 3,700 jobs and has also halted spending on projects after a 71% profit fall. Sibanye Stillwater, which has cut some jobs at its platinum mines, said its 2023 income could be down as much as 91%.

The price of palladium fell by 37% last year after surging to more than $3,400 an ounce following Russia’s invasion of Ukraine. Rhodium, which soared to almost $30,000 an ounce in 2021, is trading around $4,000 an ounce.

Impala said most of the savings over the next five years would come from projects being postponed at its Zimplats and Mimosa mines 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.

“I don’t think that we’ve got the luxury of taking two years to make these decisions,” he added.