The world’s second-largest platinum miner‚ Impala Platinum‚ is set to undergoing “major value-focused strategic” restructuring that will see the mining company shutting five of its 11 mines and retrenching 13 000 employees in the process.
Making the announcement on Thursday Impala Platinum chief executive, Nico Muller said the company’s restructuring will be implemented over a two-year period.
“To sustainably improve our competitive position, profitability and financial returns, Implats has committed to a value-focused strategy. The group intends to reduce its exposure to higher-cost and less flexible, labour-intensive operations to improve flexibility, capacity and sustainably generate attractive returns in a changing market and operating environment,” said Muller.
This change in strategic orientation has been impacted by a significant and sustained decline in the US dollar platinum price and continued high mining cost inflation explained Muller.
In order to attain economic viability in this low-price environment the company will undergo dramatic restructuring, which will include shutting down five of its underperforming 11 operating shafts.
Among the shafts expected to be shut down are the platinum group metals mines located on the Western Limb of the Bushveld Complex, whose cost pressure is particularly acute due to the fact that these mines are older and require deeper labour-intensive work to extract the ore.
Impala’s group executive in charge of corporate relations, Johan Theron, agreed that the company’s major challenges were aging shafts and slumping metal prices.
“Most of the mines to be closed are on their last legs and are no longer viable for the company to continue mining,” said Theron.
This shutting down of the five mines will also result in the reduction of the labour complement (employees plus contractors) from about 40 000 at the end of the 2018 financial year, to 27 000 over the two-year implementation period.
Muller justified the looming retrenchments, saying the restructuring was: “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,” said Muller.
Speaking to City Press on Thursday, Theron explained that the company still intended to hold talks with government, labour and other stakeholder who might be affected by the restructuring.
“We intend to find the best outcome for all parties involved and we are open to other suggestion that would ensure the best outcome for all parties involved.
“We have already cut 2000 job and during that process there we no forced retrenchments. Either people volunteered because they wanted early retirement or we upskilled our workers and they assumed other positions,” said Theron.
It is not all doom and gloom for Impala Platinum workers, assured Theron. The company was willing to listen to other viable alternatives that include selling the mines to another company, and trying out another operational model such as outsourcing.
The restructuring at the mining company will also result in the reduction of future production, from 750 000 platinum ounces a year to 520 000.
Responding to the looming changes, trade union Solidarity said it denounced “the new norm” which is “mining houses using retrenchments as the only generally accepted recourse during unfavourable market conditions”.
“Given the regulatory environment, mining houses are no longer prepared to carry the pain of financial losses… mining houses are addressing their risks immediately, using retrenchments as a short-term solution,” said Solidarity deputy general secretary for the mining industry, Connie Prinsloo.