Impala Platinum Holdings Ltd is facing some tough choices as the South African miner works to stem losses at aging shafts amid slumping prices for the metal.
The world’s second-largest producer has already cut 2,500 jobs in the year through last month and said there might be more to come.
Only three of the 10 shafts at its sprawling Rustenburg mining complex were making money as of March. Things have only gotten worse since then, with platinum prices dropping another 9 percent and hitting a nine-year low last week.
Implats, as the company is known, is to announce results of a strategic review of Rustenburg in September, spokesman Johan Theron said.
The challenges facing the industry mean that the miner cannot discount the possibility of more job losses, he said.
The company employs about 31,000 people at its Rustenburg operations.
The company said in March that the strategic review, announced last year, would look at measures to “refocus or close unprofitable areas,” and could lead to shafts being closed earlier than planned.
It would be difficult for Implats to avoid cutting its production if prices stay low, Noah Capital Markets Ltd analyst Rene Hochreiter said.
“There isn’t much management can do at this platinum price,” Hochreiter said. “They have been surviving on hope, but it isn’t a very good strategy.
Implats is not the only one facing difficulties, with about half of the industry’s production estimated to be unprofitable. Rival Lonmin PLC is cutting 12,600 jobs over three years and its future hinges on the speedy approval of a merger deal with Sibanye Gold Ltd.
Anglo American Platinum Ltd, the top producer, is in a better position than its counterparts after exiting high-cost assets, Morgan Stanley analysts said in a note.
Platinum prices have dropped by more than half since a 2011 peak, as demand for the metal used to curb pollution from diesel cars weakens, partly because of slower sales of the vehicles in Europe. The selloff in the metal has gained pace this year amid concerns that industrial demand could be curbed as trade tensions escalate.
Implats shares have dropped 35 percent this year, although it is still only the second-worst performer in the five-member FTSE/JSE Africa Platinum Mining Index, behind Lonmin. Sibanye, which produces both gold and platinum-group metals, is down 47 percent.
Implats has initiated a so-called Section 189, a labor process that South African companies must complete before dismissing workers for operational reasons, Theron said.
“The industry has been under profitability and financial viability pressure for some time, especially the deeper labor-intensive mines around Rustenburg,” he said.
While platinum-group metals in rand terms have remained persistently low, “cost inflation has continued to escalate unabated,” he added.
Implats in January shut a shaft at its Rustenburg operation, and flagged three more to be closed once mined out. Two new shafts would together produce about 300,000 ounces a year by 2021-2022 to replace higher-cost production, Theron said.
“With prices where they are, some supply has to be taken out and, sadly for the high-cost miners such as Implats and Lonmin, it probably should be them,” Liberum Capital analyst Ben Davis said. “The demand picture isn’t that great. They have to keep making cuts until the market tightens as there is no perceived scarcity of supply.”
HEAVY INVESTMENT: Moody’s affirmed the firm’s ‘Aa3’ rating with a ‘stable’ outlook due to its leading position in the industry and ability to match customer requirements Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) revenue this year is expected to increase about 21 percent to NT$1.29 trillion (US$44.01 billion) from NT$1.07 trillion last year, driven by strong demand for advanced 5-nanometer and 7-nanometer chips mainly used in smartphones and high-performance computing devices, a Moody’s Investors Service report on Wednesday said. TSMC’s rate of revenue growth next year is to increase to 7.5 percent, the ratings agency said. The company, which supplies 5-nanometer chips for Apple Inc’s new iPad series, has introduced the advanced chips ahead of its competitors and gained a significant share of the market for the foundry industry’s
NO VIRUS BLUES: A SEMI Taiwan official said that the virus does not slow down the global semiconductor industry’s investment in manufacturing equipment The production value of the nation’s semiconductor industry is expected to grow 16.7 percent this year from last year, outpacing the global industry’s 3.3 percent growth, industry association SEMI said yesterday. That would help Taiwan safeguard its second spot in the global semiconductor market with a production value of more than NT$3 trillion (US$102.73 billion), SEMI Taiwan president Terry Tsao (曹世綸) told a media briefing in Taipei for the Semicon Taiwan trade show beginning today. The global semiconductor industry’s production value is expected to increase to US$426 billion this year, SEMI said. In terms of semiconductor equipment investment, equipment billings from Taiwanese firms
Intel Corp has received licenses from US authorities to continue supplying certain products to Huawei Technologies Co (華為), a company spokesman said yesterday. Washington has been pushing governments around to world to squeeze out Huawei, saying that the telecom giant would hand data to Beijing for espionage. From Monday last week, new curbs have barred US companies from supplying or servicing Huawei. This week, the state-backed China Securities Journal reported that Intel had received permission to supply Huawei. China’s Semiconductor Manufacturing International Corp (SMIC, 中芯國際), which uses US-origin equipment to make chips for Huawei and other companies, last week confirmed that it had sought
Taipei Times: When do you think the hospitality industry can return to how it was before the COVID-19 pandemic? How does Formosa International Hotels Group (FIH, 晶華酒店集團) fare this quarter and beyond? FIH chairman Steve Pan (潘思亮): The virus outbreak will have a serious impact on business travel, driven mainly by meetings, incentive travel, conferences and exhibitions over the past three decades. For the past six months, many businesspeople have grown used to exchanging information on the Internet, where more people can participate. The trend might sustain for three to five years until people are vaccinated and it is safe to