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Impala's Brown positive on Zim Posted: Wed, 21 Nov 2007 [miningmx.com] -- NOW well into his second year as CEO of Impala Platinum, David Brown must find it odd that some analysts are calling 2008 his acid test. From Brown’s perspective, its 2007 financial year was no bed of roses. There was a major stumble at the company’s main operating mine, Rustenburg; an unspecified roadblock on its South African new order mining licence application; and the constant buffeting with regard to the security of its Zimbabwean investments. However, the growing perception is that Brown has successfully stepped in to reverse the problems, particularly at Rustenburg, where he’s also rapidly moved to stop skills leakage by improving incentives for production employees. Impala’s relationship with South Africa’s government also appears to have eased following a high profile black empowerment deal. And while Zimbabwe is as much a basket case as ever, Brown believes the country – which recently passed legislation to have 51% of foreign-owned assets sold to locals – is manageable. Through Zimplats, in which it has an 87% stake, Impala has agreed to sell a third of its mineral resources. In return, Zimplats receives 19.5% worth of so-called “localisation credits” plus a further $51m in cash – or 29.25% if no cash is received. (It wasn’t.) Analysts have gone so far as to suggest Zimplats has already achieved 40% empowerment in the light of other social investments it’s made. Brown won’t say exactly. “It’s somewhere between 30% and 40%,” he says, adding the empowerment deal is here to stay, unchanged. But more important is the security of Zimplats’ agreement that predates the passing of the localisation bill. “There’s absolutely no doubt in our minds agreements will be honoured,” he says. Meanwhile, plans may be hatched to replicate at Zimplats the ESOP Impala launched in South Africa. The fact of the matter is that Zimbabwe represents too much growth to be ignored by Impala. Whether Impala receives recognition for its Zimbabwean exposure is a moot point. Securing unbroken power, food for its employees and a stable foreign exchange regime are the other key concerns for Zimplats; and Mimosa, another asset in which Impala has a stake. If those concerns can be managed within reasonable boundaries, Brown is happy Zimbabwe is workable. So far it’s worked: if Zimbabwe has surprised investors, it’s often been politicking, although conditions in the country are far from ideal. Brown’s position is typical of any new, high profile incumbent. Although a company stalwart – he’s been its bean counter for eight years – his transition to CEO has been watched carefully. Unseen banana skins may have Brown and his relatively unknown management team unfavourably compared to that of his predecessor, Keith Rumble. Central to it all is Rustenburg: its bread and butter. It accounts for 50% of Impala’s production. Output was down about 6% to 1.06 million oz this year. There was also high turnover among front line managers while Impala’s much admired safety standards wobbled. Coming so soon after the departure of Rumble there were questions. Says Brown: “Problems like those at Rustenburg don’t just happen overnight. There were signs of problems in October 2005 (when Rumble was still CEO). Safety was also a problem.” Brown says Rustenburg will be back to normal production in the current financial year. There’s even a chance of pushing for 1.2 million oz, although “... that might take a while”. Safety is also high on the agenda. It’s currently a charged matter, given recent charges from unions that mining firms put profits before people. “The worst phone call I get is news of a fatality. If there’s any part of the job I could change it would be that. It’s really distressing,” says Brown. Click Here to subscribe to our daily newsletter
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