Implats restructuring plan hits earnings

Impala Platinum's [JSE:IMP] restructuring plan has impacted earnings, with the company reporting a full year loss of R10.8bn, according to annual financial results released on Thursday. 

The firm's loss-making Rustenburg operations, undergoing restructuring that will affect up to 13 000 employees, recorded an impairment of R13.6bn. 

"Earnings for the year were adversely impacted by impairments of R13.6bn, relating to impairments of assets of Rustenburg, following the outcome of the strategic review, and R611m relating to the Afplats assets, due to lower forward-looking prices assumptions. 

"The loss after tax increased by 33% to 10.8bn, from a loss of R8.1bn the previous year," the company said. 

No dividend was declared.

Fierce criticism

The company plans to reduce its Rustenburg shafts from 11 to 6, in a plan that has been met with fierce criticism from Minerals Resources Minister Gwede Mantashe.

Implats CEO Nico Muller confirmed that the company was going ahead with the plan, which would be carried out over a two-year period.

Muller said the world’s second biggest platinum producer was set on reducing costs, looking at credible offers to take over the operations.

"We are not saying we will close down the shafts at all costs. If we are able to find alternatives, we will utilise them," said Muller.

He said the restructuring of Rustenburg was needed due to challenging macro-economic realities, which required an "urgent transition into a leaner, more concentrated and profitable" operations.

A total of 300 people have already left their jobs as part of the restructuring process.

Other alternatives would include the transfer of workers to vacant posts, re-skilling and voluntary separations.

'Find common ground'

Muller says he hopes the company and the Mineral Resources Dept will eventually find "common ground" on the job losses issue.

"I understand the minister's frustration over possible job losses, but we have been engaging with the department to find common ground," he said.

Implats said the platinum industry continued to face "unprecedented challenges and uncertainties", forecasting a softer demand for the next three years.

The company noted leadership changes in both South Africa and Zimbabwe, where also has a presence, saying the changes had resulted in meaningful dialogue with the regulators.

In South Africa, the Mining Charter remains an area of focus.

"In our view, the principles outlines in the charter are, in the main, conducive to the growth and development of the minerals industry and we will continue to engage constructively to contribute towards a satisfactory outcome of the process."

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