Implats says investors continue to influence “volatile” PGMs

INVESTORS continued to influence platinum group metals (PGMs) in Impala Platinum’s (Implats’) third quarter resulting in volatile pricing, the firm’s CEO Nico Muller said in a production update on Monday.

Demand from Implats’ contractual customers was “robust” despite macroeconomic and geopolitical uncertainty, he said. Spot sales were also elevated in the three months.

But Muller added: “PGM pricing remains lacklustre however, with notable volatility in both platinum and palladium reflecting the continued influence of investor activity”.

The spot price of palladium is unchanged in the last three months although the metal gained as much as 8% in March. Platinum is 3.5% higher since February. “Margins remain compressed,” said Muller.

As a result, South African PGM producers have set about more restructuring. According to a report by RMB Morgan Stanley, published on March 13, mines owned by Sibanye-Stillwater, Impala Platinum (Implats) and Northam Platinum’s Eland mine could burn about $430m in cash, after stay-in-business expenses, by calendar year-end without cost cuts.

Implats announced on April 26 that as much as 3,900 jobs were on the line – about 9% of the workforce at Impala Rustenburg, Impala Bafokeng and Marula, as well as the corporate office – as it investigated restructuring.

In February, Anglo Platinum said it could cut about 3,700 jobs, about one-fifth of the workforce, at its South African operations after profits in the year to December plunged by 71% compared with a year previously. Sibanye-Stillwater has also announced restructuring at its PGM operations, especially at its US Stillwater mine.

Implats has not been helped by third quarter production data in which 6E concentrate production fell at Impala Rustenburg, Marula and Impala Canada. The decline in throughput at Rustenburg was partly owing to the ramp up at the 11 Shaft complex following an accident in November that claimed 13 lives.

Overall, Implats’ third quarter production, and its production for the financial year-to-date, was higher owing to a recovery at Zimplats and the inclusion of Impala Bafokeng (formerly Royal Bafokeng Platinum).

But Impala Bafokeng continues to pose problems for Implats. Muller has commented previously that the Styldrift mine was only delivering about 60% of installed capacity which had a negative cost impact.

Muller said “production momentum” was hit by an illegal sit-in at Bafokeng Rasimone Platinum Mine in January while Styldrift “remains constrained by mining fleet and operational impediments”. Processing volumes and stability were also challenged by low mined volumes and planned maintenance as a series of “revised protocols” were implemented across the asset base.

A revised production plan has also been implemented at Impala Canada which will see the palladium dominant operation mine higher grades. While hitting mine life it would help the asset survive the current price downturn.