Implats expecting phased reduction in group output

Implats half-year results presentation covered by Mining Weekly's Martin Creamer. Video: Darlene Creamer.

29th February 2024

By: Martin Creamer

Creamer Media Editor


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JOHANNESBURG ( – A phased reduction in group output owing to a probable decline in production from Impala Canada and Mimosa in Zimbabwe is likely from platinum group metals (PGMs) mining and marketing company Implats, which on Thursday reported lower group profitability, despite disciplined cost control and solid production across several operations.

The odds-on decline in production amounts to roughly 8% of the production guidance of the 2024 financial year to June 30. (Also watch attached Creamer Media video.)

Group six-element, or 6E, refined and saleable production is expected to be between 3.30-million ounces and 3.45-million ounces for the 50-year-old, 67 900-employee Implats, which has eight operations in three countries.

On top of that, the Johannesburg Stock Exchange-listed Implats is looking at previously planned expansion of 210 000 oz potentially not happening.

“Put together, it equates to roughly 14% of our internally planned production,” Implats CEO Nico Muller said during an in-person and virtual presentation of results covered by Mining Weekly.

The group generated earnings before interest, taxes, depreciation and amortisation of R8.4-billion, headline earnings of R3.3-billion or 365c a share, and recorded a free cash outflow of R4.8-billion, after funding capital expenditure (capex) of R6.8-billion.

Guidance set in September remains the same other than the capex guidance, which has been reduced to between R11-billion and R12-billion from R12.5-billion to R13.5-billion.

Implats is pulling in its horns amid the price determination of PGMs not correlating to market fundamentals but being influenced by the marginal buyer that buys metal in a market where there is an abundant amount of metal available on surface.

In the bargain, too, is the global economy’s super inflation and interest rate pressure on reserve banks and central banks, factors that have lowered the global economic growth rate.

“Even now it is evident if you look at the Purchasing Managers' Index, particularly for manufacturing, in most of the economies that use our products, you will see that the PMI is just over 50, which indicates that there is going to be contraction in the growth rate of that particular economy and at the moment it is just hovering above 50, so it indicates a fairly low expectation of economic growth in those jurisdictions.

“When you have this very bearish sentiment on the global economic growth rate, it tends to have a negative impact on commodities.

“It’s not only the PGMs market but we’ve seen a downward trend in battery metals prices as well,” said Muller.

On top of that, there are elections in 64 countries, conflicts in Ukraine, Palestine and potentially Taiwan and all of these are creating uncertainty.

“Therefore, if you are a manufacturer and you consume our products, there’s been a trend of destocking. We saw it in the fibreglass industry and autos.

“Even on the back of fairly positive automotive sales last year, we have not seen an immediate price response.

“There is general consensus across the market that we cannot expect a rapid price recovery any time soon given the fact that it's tied to what’s happening across the globe with macro factors,” Muller said.

The Implats basket price declined by 32% mainly on palladium’s 41% fall as well as the drop in the price of rhodium, despite a really solid fundamental operating performance across all of the group’s operations, bar one.

“But notwithstanding that performance, and I‘m talking of production of ounces as well as cost containment, we’re going to see that our revenue declined by 25% and we’ll see the downward trend in cash flow.

“This is necessitating a strong strategic response from the company and it cannot just involve marginal improvements in productivity and cost optimisation at the operations,” he said.

The tide has turned and while fundamental demand for primary products remains robust, current pricing requires a strategic response.

It is seen as vital that all operations contribute through the cycle and seek to ensure long-term sustainability of the group.  

“Our appetite for investment in general has contracted significantly.

“Whatever aspirations we may have had to grow the company beyond our current phase or to diversify have been put on hold.

“This also extends to investment such as initiating the Waterberg project. Our appetite for initiating these investments is very low at the moment and we’ll have to see a very strong price improvement before that changes.

“In addition to that, there are a number of operations that are going to have to go through a significant change in operating strategy,” Muller added.

Palladium-heavy Impala Canada has restructured, repositioned, and adopted a strategy that will see the mine operating at a higher grade.

Impala Canada’s operating costs have declined from $1 300/oz to $1 050/oz with the labour complement reduced by 21%.

Plans are being worked on that will see a further reduction.

Implats is also in the process of evaluating corporate restructuring and assessing every single other operation in the group on the back of the market it is facing.

The significant retracement in PGMs pricing over 2023 has placed considerable pressure on South African and North American producer economics. Capex, which was set to peak across the industry in 2023 and 2024, has been scaled back as a result, with several mine closures and project deferrals announced.

Implats retains its assertion that previously planned capex was primarily aimed at improving asset integrity and environmental performance, and that the limited project profile served as replacement rather than growth off the existing asset base. Current PGMs pricing will induce further supply rationalisation, with primary supply now set to decline in the medium term.


Implats expects 2024 to be a difficult year characterised by anaemic precious metal consumer and investor sentiment as economic and geopolitical uncertainty linger.

While the group has benefitted from some retracement in input pricing escalation, inflationary pressures on operating and capital costs have persisted.

Individual operational responses continue to evolve, and a comprehensive review of medium-term capex and planned production profiles has been initiated and implemented, with steps taken to preserve cash balances and secure positive free cash flow.

Group stock-adjusted unit costs are forecast to rise by between 6% and 10% to between R21 000/oz and R22 000/oz.

Edited by Creamer Media Reporter




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