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Impala loss narrows as it cuts 1 400 jobs at biggest mine

Miner shuts shafts at Rustenburg operation to save cash.

Impala Platinum Holdings will keep closing unprofitable operations after cutting 1 400 jobs and shuttering shafts at its main Rustenburg mine to narrow financial losses at the world’s second-largest producer of platinum-group metals.

The Johannesburg-based company will “refocus or close unprofitable areas” to reverse a headline loss excluding one-time items that shrank to R150 million ($13 million) in the half ended in December from 508 million rand a year earlier, it said in a statement on Thursday.

Platinum prices have fallen by half since a peak in 2011 as demand for the metal used to curb pollution from diesel cars weakened, partly because of slower sales of the vehicles in Europe. South African platinum producers are also grappling with a local currency that has gained 10% against the dollar since June, pushing up their costs.

Impala says cost cutting will help it raise its cash flow by as much as R1 billion in the next two years. It halted four shafts at Rustenburg in January and is improving operations at three others. It wants to operate lower-cost, shallower, mechanised assets, it said.

Strengthening outlook

“The market fundamentals for platinum are only expected to strengthen materially from 2020 onwards, with the introduction of stricter heavy-duty diesel emission regulations, and with supply from South Africa starting to taper off,” the company said. Demand for palladium and rhodium is “robust,” supported by growth in demand for gasoline cars.

Impala estimates full-year refined production at 1.5 million platinum ounces.

Impala’s Zimbabwe unit plans to work with the local government to allow the company to comply with laws that currently require platinum and diamond miners to sell 51% stakes to local black people, Alex Mhembere, chief executive officer of Zimplats Holdings , told a conference call. The company won’t need to give up equity to meet requirements, Mhembere said.

Mines Minister Winston Chitando said last month that the law may be waived.

“We are going to work with the government to achieve those requirements without necessarily issuing equity,” Mhembere said.

© 2018 Bloomberg


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