Implats to post solid interims despite loadshedding taking metal stockpile to 140,000 oz

Impala Platinum

IMPALA Platinum (Implats) said it lost refining capacity owing to Eskom loadshedding but rand depreciation and relatively solid pricing of platinum group metals (PGMs) will see the group report unchanged interim Ebitda of R24.5bn year-on-year.

Commenting in a production update for the six months ended December, Implats said refined production fell 9% year-on-year to 1.48 million 6E ounces. Smelting capacity was “constrained” by increased and more severe loadshedding.

The company is also rebuilding its No. 4 Furnace in Rustenburg which contributed to the lower refined output for the six months.

The outcome was that Implats had 140,000 oz of excess inventory as of December 31. Loadshedding, which is imposed on mining firms as power curtailments rather than outright cuts, resulted in it refining 38,000 oz less metal in the period. Concentrate production was 9,000 oz lower because of power curtailments but ended the calendear year at some 1.62 million oz – largely unchanged from a year ago.

The hit to sales, which were 2% lower at some 1.5 million oz, was contained as Implats reduced existing inventories. A 9% decrease in the achieved US dollar basket price was offset by the 16% weakening of the rand exchange rate, resulting in a 5% improvement in Group sales revenue to R38 117 per 6E ounce sold.

Implats said that it costs were hit by rand depreciation which increased the cost of imported goods at its Zimbabwe and Canadian operations.

It estimated that group unit costs per 6E oz were expected to increase to about R19,350 on a stock adjusted basis due to inflationary pressures, rand depreciation and the final payment of a discretionary employee bonus given the group’s strong performance during the 2021 financial year.

RMB Morgan Stanley said Implats’ numbers “could be viewed positively by the market given depressed expectations across the sector into the December 2022 reporting season”.

In January, Implats spokesman Johan Theron told Bloomberg News that loadshedding would inevitably hurt South Africa’s PGM production. “If things don’t get better soon then we are likely to have a worse period this year than last,” he said. “If it gets worse it will get to a point when you have certain days where we will stop sending people underground.”

South African PGM output last year was probably on average 6% below producers’ initial guidance and one of the worst in the past two decades, said Bloomberg quoting from a report by UBS.

In November last year, the World Platinum Investment Council forecast a supply deficit for platinum of 303,000 ounces owing to lower primary production – a 1.1 million oz turnaround compared to 2022.