Implats to Cut 13,000 Jobs and Reduce Shafts to Stem Losses
Implats to Cut 13,000 Jobs and Reduce Shafts to Stem Losses
(Bloomberg) -- Impala Platinum Ltd. will cut about 13,000 jobs and close or sell shafts as the world’s second-largest producer takes unprecedented steps to stem losses at its struggling Rustenburg mining complex in South Africa.
Implats, as the company is known, is embarking on a restructuring plan that will reduce the labor force at Rustenburg to 27,000 employees and contractors and shrink the number of operating shafts from 10 currently to six. Implats is focusing on newer, lower-cost shafts as platinum prices hover near a decade-low and has spent months on a review of Rustenburg, a sprawling complex where only three of the shafts were making money as of March.
The plan announced Thursday is aimed at making Rustenburg economically viable by the company’s 2021 financial year, even at low platinum prices, the company said.
“We had to address the cash burn” at Rustenburg, acting Chief Financial Officer Ben Jager told reporters. “This process had to happen now.”
The extent of the restructuring should result in an operation where revenue exceeds so-called all-in costs, which is a positive, analysts at Morgan Stanley said in an emailed note.
Implats shares rose as much as 8.5 percent and traded 3.8 percent higher at 2:01 p.m. in Johannesburg, paring this year’s decline to 38 percent.
However, South African Mineral Resources Minister Gwede Mantashe criticized Implats for “acting in bad faith” and not following an agreed-upon process before announcing the job-cut plans.
The company now sees annual platinum production at Rustenburg of 520,000 ounces, from a prior 750,000 ounces, “removing non-profitable platinum production from an over supplied market.” The plan will result in restructuring costs of about 2.7 billion rand ($204 million) in its 2019 and 2020 financial years, Implats said.
The company, which has already cut 2,500 jobs in the year through June, isn’t the only one being forced to make tough decisions. Smaller rival Lonmin Plc has announced plans to cut about 12,600 jobs over three years. Anglo American Platinum Ltd., the largest producer, went through a process of winding down and selling older, higher-cost operations before restarting dividend payments this year.
Implats will follow the Anglo unit’s strategy of focusing on low-cost mines and boosting palladium output to take advantage of the metal’s deficit, said Chief Executive Officer Nico Muller. While mining at Rustenburg will continue for the next 15 years, Implats’s future will be built on operations such as its Two Rivers and Zimbabwe platinum mines, he said.
“If our entire portfolio could be like that, then we would be paying dividends,” the CEO said in an interview.
To contact the reporter on this story: Felix Njini in Johannesburg at fnjini@bloomberg.net
To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Liezel Hill, Dylan Griffiths
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