Impala Platinum, the top producer of platinum group metals (PGM) in South Africa, intends to reduce its expenditure by R10bn (around $512m) in the next five years as net income dropped by 88% in the first half of the fiscal year due to the decline in metal prices.

Nico Muller, CEO of Impala Platinum, also known as Implats, said: “PGM pricing has been negatively impacted by a confluence of factors that look set to persist in the medium term. We expect 2024 to be a difficult year characterised by anaemic precious metal consumer and investor sentiment as economic and geopolitical uncertainty linger.” 

If metal prices continue to decline and the restructuring of operations fails to improve margins, Implats may consider shutting down some unprofitable mining shafts in South Africa, according to Muller.

The primary focus of the cost-cutting measures will be operations in Zimbabwe and Canada, where the greatest savings can be achieved, the company said in a statement. 

Implats’ year-end performance was largely influenced by an accident that occurred on 27 November 2023 at its 11 Shaft, killing 13 employees and injuring 73. “The 11 Shaft tragedy at Impala Rustenburg was a devastating and significant event for our Group and we continue to progress investigations into the accident while providing ongoing support to our many colleagues who have been impacted as a result,” Miller said in a press release. 

The revenue for the current period was R43.4bn, 25% lower than the previous comparable period despite higher sales volumes. The company cited the decline in dollar metal prices, although the weaker rand exchange rate slightly offset this. 

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The cost of sales declined by 2% to R40bn, primarily due to the lower cost of metals purchased by Impala Refining Services. However, this decline was offset by the maiden interim consolidation of Impala Bafokeng.

Implats recorded an EBITDA [earnings before interest, taxes, depreciation and amortisation] of R8.4bn, headline earnings of R3.3bn (365 cents per share), and a free cash outflow of R4.8bn after funding R6.8bn for capital expenditure.
The prices of platinum, mainly used by automakers to reduce harmful emissions from traditional combustion engines, have decreased recently.

South African producers suggest that the drop in demand is due to a combination of weaker economic growth in China and a decrease in manufacturing activity, which had previously built up stocks during Russia’s invasion of Ukraine, Reuters reported.