Implats says PGM demand on the rise again but warns of “challenging” operating conditions

Nico Muller, CEO, Impala Platinum

IMPALA Platinum (Implats) said recent discussions with core clients indicated demand was on the charge again for platinum group metals (PGMs) – a development that would support “robust” revenue in the group’s 2023 financial year.

Commenting in a first quarter production report today, the group’s CEO Nico Muller also said the group continued to experience interruptions as a result of Eskom loadshedding. It resulted in “adjustments to hoisting, concentrating and smelting rates” in the first quarter in South Africa “which adversely impacted operational momentum during the uqarter”.

There was a capital build totalling 25,000 6E PGMs as a result. Anglo American Platinum said in a first quarter production report on Thursday there had been a 40,400 ounce build in work-in-progress inventory as a result of loadshedding.

Implats’ first quarter total concentrate output grew 2% year-on-year to 824,000 ounces consisting of 593,000 oz in ‘managed’ production – Impala Rustenburg and Zimplats – with the balance from its joint ventures and third party concentrate supply. Sales, however, fell 5% year-on-year to 708,000 oz as Implats undertook previously announced maintenance.

Despite the impact of loadshedding, Implats has not adjusted its concentrate production guidance for the 2023 financial year which it put previously at between 3.1 to 3.3 million ounces. It has forecast refined production of between three to 3.15 million oz.

Muller said that socio-economic pressures continued to exert an influence on mining and processing especially at Impala Rustenburg where “the operating environment remains challenging”. There was industrial action among contractors related to the individual tax status of certain permanent employees which impacted their employee share ownership trust payouts. Production was also affected by safety stoppages following a fatality at Impala Rustenburg’s 16 Shaft.

Social economic factors were being compounded by rising global inflation which had been aggravated by rand depreciation. Muller has commented previously on the negative impact of community disruption near the group’s mines in South Africa’s North West province. Youth unemployment in South Africa’s regions is more than 40% and corruption is rife.

Fortunately, the strength of long-term PGM supply/demand fundamentals are beginning to re-assert themselves. “Despite these headwinds, we expect revenue to remain robust,” said Muller. “Recent discussions with our core customer base confirm our expectations for rising demand for our key products over the coming year” although he added that pricing remained “volatile” and “vulnerable to macro-economic news flow”.

Implats reported a 4% decline in concentrate production for its 2022 financial year partly owing to a decline to 2.27 million ounces in output at its managed mines and a similar decline in joint venture production. Third party concentrate supply also fell. Group refined 6E production of 3.09 million oz fell 6% partly owing to extended maintenance which was required at the Number 3 furnace at Impala Rustenburg.