South African platinum mining company Impala Platinum is set to reduce its mining footprint from 11 to six and cut production to 520,000oz platinum per annum as part of its restructuring plans.
The company has taken this decision as a result of a significant decline in the price of platinum, as well as sustained high mining cost inflation. It plans to improve its competitive position, profitability and financial returns.
Impala currently employs 40,000 people and produces 750,000oz of platinum a year. The decision will affect 13,000 jobs within two years across its operations.
According to the company, the restructuring efforts will cost $201m during 2019 and 2020, which will be funded by selling inventories and through internal cash resources.
Implats CEO Nico Muller said: “The only option for conventional producers today is to fundamentally restructure loss‐making operations to address cash‐burn and create lower‐cost, profitable businesses that are able to sustain operations and employment in a lower metal price environment.
“While employee rationalisation is inevitable in a restructuring process of this nature, due care will be taken to ensure that job losses are minimised as far as possible through a range of job loss avoidance measures.
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“This major transformation will be phased over a two year period to ensure that we are able to mitigate the various implementation risks and socio‐economic impacts.”
The group also noted that it will reduce its exposure to higher‐cost, less flexible, labour‐intensive operations to improve flexibility and capacity as part of the restructuring efforts.
The company will also close operations at Impala Rustenburg’s uneconomic shafts in a phased approach and plans to focus future mining activity on profitable and longer‐life assets.
Furthermore, the Platinum Group Elements (PGE) mill grade will increase from 4.09 g/t in this financial year to 4.25 g/t in fiscal 2021, as well as the Merensky:UG2 ratio will increase from 42% to 50%.
The company will also reduce replacement capital from $61.33m per annum in the current fiscal 2018 to $8.97m in the 2021 financial year followed by to zero in the 2023 financial year.