IMPALA Platinum (Implats) would not be able to guarantee the payment of employee wages were the South African government to extend the 21-day lockdown.
“Management met with organised labour at both the national and branch level before the lockdown and agreed to continue paying all employees during the 21-day lockdown period,” Implats said in an update today. “However, it was communicated to all stakeholders that alternative arrangements will need to be implemented should the lockdown period continue beyond the envisaged 21 days.”
Implats is one of the first companies to suggest that it could not pay workers’ salaries indefinitely, although another company listed on the JSE, MC Mining, said last week it had implemented a “no work, no pay” rule for non-essential staff, referring them to the government’s Temporary Employee Relief Scheme.
Johan Theron, spokesman for Implats, said “a range of options” could be put to employees were the lockdown extended. “We could allow employees to take leave, put in partial payments, or rely on the UIF (Government’s Unemployment Insurance Fund)”.
The likelihood of there being an extension to the 21-day lockdown – intended to stem the rate of infection of the COVID-19 virus – was indicated by how similar measures in the US and Europe had been managed, Theron said. “We have seen lockdowns extended so it would be naive of us to think it wouldn’t happen.”
The payment of wages whilst operations are mostly idled will become a contentious point for the South African mining industry as a whole if there is extended down time, and in the absence of any additional government provisions, such as deeming all mining essential. Bank of America Merrill Lynch said in a note on March 23 that whilst there was no obligation for firms to pay salaries, President Cyril Ramaphosa had asked them to do it.
“The President implied that that is the expectation, as he called on large businesses to ‘take care of’ their people,” said BoA Merrill Lynch.
Implats had no immediate plans to bolster its balance sheet, but it was not “sitting on its hands either”, Theron said. Last week AngloGold Ashanti announced it would draw down on $1.4bn from a revolving credit facility of which half would be to support its balance sheet.
APPLICATIONS TO CONTINUE LIMITED OPERATIONS
Implats had submitted an application to the government to continue smelting operations at Impala Rustenburg and run limited operations at its Springs refinery aimed at treated some in-process inventory. It also hoped to operate underground ore transport and milling at its South African mining operations. This would help in securing underground infrastructure during the lockdown and allow speedy restart once the lockdown was lifted.
Government regulations allow for essential services to continue, such as the processing of platinum group metals (PGMs), on application. A separate application to continue operating at Implats’ Zimplats had been made to the Zimbabwean government which has instituted similar lockdown arrangements. Operations at Implats’ Canadian operations were unaffected as the government had deemed them to be essential services.
South African PGM supply is limited after Anglo American Platinum said earlier this month it had shut its refining operations following an accident and technical problems at its back-up unit. It expected to report a PGM refined shortfall of 900,000 ounces this year.
Implats said letters of force majeure had been issued “… to all consultants and contractors for the duration of the lockdown, to legally suspend our obligations under these contracts”. Force majeure letters have also been issued in respect of offtake agreements with both group companies and third parties, as well as customer supply contracts.
