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Implats mulls purchases in low-cost asset shift

The struggling miner is looking beyond a plan to close unprofitable shafts in South Africa.

Impala Platinum said it’s open to acquiring low-cost assets as the struggling miner looks beyond a plan to close unprofitable shafts in South Africa.

The No. 2 platinum producer, known as Implats, is playing catch-up with larger rival Anglo American Platinum, which is boosting output and profit after shifting to lower-cost operations. Chief Executive Officer Nicolaas Muller said Implats could return to profit by around 2020 by shutting older shafts at its Rustenburg mining complex. That would allow the company to pursue growth.

“There remains an opportunity for larger-scale consolidation,” Muller said in an interview at his office in Johannesburg. “If something appears on our radar screen, we will not be closed to it.”

With the CEO forecasting that platinum prices are unlikely to rebound before 2022, when supply constraints emerge, Implats’s strategy may include jointly developing adjoining deposits to minimize costs. That includes assets in South Africa’s palladium-rich Waterberg region, where one of its properties borders Ivanhoe Mines’ Ivanplats operation.

“Consolidation across the boundaries is definitely an opportunity for us and for our neighbours,” Muller said.

Tight supply will continue to bolster palladium and rhodium prices, providing a buffer for South African platinum producers, Muller said. Projected supply deficits for palladium amid strong demand from automakers will increase price pressures “unless there is a switch back to platinum,” he said.

© 2018 Bloomberg L.P

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