Implats told Business Report last month that it expected the PGM market to remain challenging over the near term. Picture: Supplied
Impala Platinum’s (Implats) production for the six months to December 2024 fell 4% to 1.8 million 6E ounces while its expects earnings for the interim period are expected to plunge despite sales volumes increasing by 5%, on the back of lower capital expenditures and expectations of a less rosy platinum group metals (PGM) outlook.
Implats told Business Report last month that it expected the PGM market to remain challenging over the near term.
PGM miners are battling sustained weakness in prices of the commodity, prompting many of them to institute cost rationalisation that has included retrenchments and capital expenditure cuts.
Despite restructuring operations and instituting retrenchments, interim group unit costs per 6E ounce for Implats are expected to increase by 3% to R20 900 on a stock-adjusted basis.
Additionally, “moderating input inflation and labour savings were bolstered by rand appreciation on the translated dollar cost base” of Zimplats in Zimbabwe and Impala Canada, said the company on Tuesday.
Implats’ headline earnings and headline earnings per share for the half year to December are expected to be lower by between 40% and 49% at between R1.65 billion and R1.95bn, and between 184 cents and 217 cents per share, respectively.
“Headline earnings for the period decreased primarily due to lower rand revenue arising from an 8% retracement in achieved rand revenue per 6E ounce sold,” Implats said in a trading update Tuesday.
“Lower dollar pricing was compounded by the strengthening rand exchange rate, which more than offset the benefit of improved refined and saleable output, higher sales volumes and strong cost controls achieved in the period.”
The lower earnings performance of the company for the period comes against the backdrop of a fall in capital expenditure. It said that the commissioning of various projects during the half-year meant capital expenditure fell to R4bn “due to lower levels of growth and replacement capital” as projects neared completion.
Earnings before interest, tax, depreciation and amortisation for the half year amounted to R6.5bn.
“Our expectation is that the physical market will improve further over time with an improved macro outlook, ongoing supply responses and a more pragmatic auto electrification outlook,” Johan Theron, spokesperson for Implats told Business Report by email recently.
“However, the near term could remain bumpy for some time.”
In terms of production, Implats’ output fell 4% to 1.82 million 6E ounces. Impala Rustenburg increased production by 2% to 687 000 stock-adjusted 6E ounces while Impala Bafokeng production amounted to 254 000 6E ounces in concentrate, “benefiting from improved efficiencies” at Styldrift.
Production from Marula “remained challenged by constrained mining flexibility and organisational restructuring implemented in the period,” with 6E concentrate production declining 10% to 101 000 ounces.
The Zimbabwean unit of Implats, Zimplats, saw its 6E production in matte decrease by 15% to 280 000 ounces. This has been attributed to “accumulation of concentrates during the commissioning of the expanded smelter” complex at Selous.
At Impala Canada, 6E concentrate volumes reduced by 20% weaker to 116 000 ounces, reflecting revised operating parameters and lower underground grade for the company.
While Two Rivers recorded a 1% increase in 6E in concentrate production to 153 000 ounces, the company’s Mimosa JV with Sibanye-Stillwater in Zimbabwe raised 6E in concentrate volumes for the period by 3% to 129 000 ounces, despite challenges presented by power outages that are hobbling producers in the country.
Implats ended the half year period under review with “excess inventory” of about 375 000 6E ounces although sales volumes quickened 5% to 1.77 million 6E ounces. This was inclusive of saleable production from Impala Canada and Impala Bafokeng.
“The softer US dollar basket pricing was compounded by appreciation in the rand exchange rate and group sales revenue decreased to circa R23 800 per 6E ounce sold,” explained the company.
BUSINESS REPORT