[miningmx.com] — IN my mind’s eye, I have this picture of David Brown;
with a glass of New Year’s champagne in one hand and the last bars of ‘Auld Lang
Syne’ ringing in his ears, wondering what 2012 would bring him. A brutal self-
assessment of his leadership of Impala Platinum (Implats) might have provided the
daunting answer: “Different year; same problems.”
A quick look at Implats’ prospects for 2012 gives one a sense of deja vu.
Zimbabwe, although its fortunes are not priced into the share, continues to be the
basket case it has always been. Worse, there’s no sign that business conditions
there are going to be clarified any day soon. In fact, they could become more
complicated as Zanu-PF, Zimbabwe’s ruling party, considers shifting elections a year
earlier to 2012. This would mean a resolution on indigenisation – black economic
empowerment legislation – might have to wait until the completion of the election
race.
Secondly, platinum mining cost controls are going to be predictably difficult to rein
in. According to some estimates, ‘Section 54’-related work stoppages following
underground fatalities on South Africa’s platinum mines will continue to hammer
production; raising costs. We all want safety to improve, but the zero-fatality goal is
still a dream. No-one wants to admit it, but there’s no end in sight to underground
fatalities on South African deep level mines. In the first week of January, while most
of us were blowing the dust off our laptops, two miners had been killed on two listed
South African (gold) mines.
Additionally, labour expectations and union dominance will be a fixture in South
African mining for years to come. Combine that with the likelihood that industrial
demand globally will be stunted, at best, in 2012 – placing downward pressure on the
platinum price – and you can see why Brown would come to the conclusion that he’d
done what he hoped to do at Implats, and could do no more. As he commented to
Miningmx earlier this week, he’s due some “quiet time.”
Knowing when to call it a day is not easy, particularly as Brown has played a
relatively solid innings while in charge of Implats.
Take the last five years, for instance. Impala’s share price performance is flat but,
relative to Anglo Platinum, it has outperformed the company it used to call “Number
One.” Even now, Impala is the preferred platinum stock for some of the mining
analysts Miningmx consulted.
Brown certainly dealt with empowerment in South Africa much better than Anglo
Platinum which, as we speak, is trying to re-piece its empowerment deal with
Anooraq Resources, while its Mvelaphanda Resources platinum experiment is now part
of corporate history.
It’s hardly the most scientific gauge of Brown’s worth to shareholders, but on the
announcement of his imminent departure, scheduled for end-June, the market sold
down Implats 2.75% – about R2.8bn.
GOODLACE
The expectation is that Brown will be succeeded at Implats by Terence Goodlace,
currently CEO of Metorex. Goodlace, a former Gold Fields executive, has the deep
level, hard rock mining experience and did a good job of dealing with Metorex’s
operations. The fact that Goodlace sits on Impala’s board also stands him in good
stead. It seems natural he’s the anointed, although one analyst remarked that
running Metorex is not like running Implats, the world’s second largest platinum
producer.
Brown’s resignation also raises another factor: management fatigue.
According to one analyst, more resignations among South Africa’s mining executive
class are possible in 2012, which is shaping up to be a gruelling year. We haven’t
even dwelled much on governmental proposals for state intervention in the sector
and what perils or challenges that might bring. As Brown himself commented, South
African mining is unrelenting.
