Impala Is Identifying Buyers for Shaft Earmarked for Closure

(Bloomberg) -- Impala Platinum Holdings Ltd. is in the process of selecting potential buyers for one of the shafts it had planned to close in April as part of a restructuring plan for its Rustenburg mining complex.

The world’s second-largest platinum producer is considering options including selling shafts or inviting contractors to run the operations. A selection process to identify and engage with possible takers for its number 1 shaft, which employs 3,000 people, is under way, the company said in a statement Wednesday.

Key Insights

• Finding a buyer for the shaft may help save some of the jobs that the company has warned it will need to cut. Its restructuring plan involved closing six shafts and Implats says it’s in the process of cutting an initial 1,500 jobs. As part of a wider restructuring plan, the company plans to cut more than a quarter of its 40,000 workforce during the next two years to help focus on newer, lower-cost mines.
• South African platinum producers are struggling with prices of the metal near the lowest since 2008. Still, Impala’s output of refined platinum rose 8.2 percent in the first quarter to 369,000 ounces and its Rustenburg operations, where it intends to close unprofitable shafts, posted a much stronger operational performance.
• The country’s miners have also benefited from a weaker rand and improvement in palladium and rhodium prices, helping cut costs while generating more income. Impala’s revenue climbed 14 percent in quarter through September.

Market Reaction

• The shares rose as much as 9.1 percent in Johannesburg, the most in more than a month, after the quarterly production report.
• While the improved production is a good indicator, Impala would still need to push ahead with restructuring the unprofitable operations, said Arnold Van Graan, an analyst at Nedcor Securities Ltd.
• Restructuring “is something which we believe needs to happen, irrespective of a stronger first quarter or higher metal prices,” Van Graan said.

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• For more details on the earnings, click here

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, Nicholas Larkin, Dylan Griffiths

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