Embattled Impala Platinum may be slashing 13,000 jobs in a US$155m restructuring of its South Africa Rustenburg operations, but in Zimbabwe the 5,942 jobs at its Zimplats operations are safe.
Rustenburg’s are Impala’s primary operations, in which it holds a 96% stake. In Zimbabwe it holds 87% of its Zimplats operation, which consists of four shallow mines and one open-pit operation southwest of Harare.
“Impala’s Zimbabwe operation has always been profitable and a better performer,” said Arnold van Graan, mining analyst at Nedbank Corporate and Investment Banking.
“It’s been ticking along nicely and essentially carrying the can and paying for the losses in Rustenburg.”
The jobs in Zimbabwe represent more than 10% of Impala’s 52,000 employees. For the financial year ended June 30 2017, Impala Rustenburg brought in R14.6bn in revenue, but was also responsible for a R9.86bn loss. Zimplats brought in R7bn in revenue and R576m in profit.
“The performance of Zimbabwe is a function of the ore body. It’s all mechanised; that’s a big differentiator,” Van Graan said. “The conventional labour-intense model, like that of Rustenburg, is facing deteriorating economics as input costs have increased sharply [with] a significant reduction in productivity.”
The poor economics of mining in Rustenburg, where shafts are deep and difficult to mechanise, prompted Anglo American Platinum to sell off those assets in 2016. As a result the company is now in a significantly stronger position compared to its peers.
At Rustenburg, the two-year restructuring process will reduce Impala Platinum’s 11 shafts to six. Upon announcing the restructuring last week, 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.”
Impala’s other operations — Marula in Limpopo where it holds 73%, the Two Rivers joint venture in Mpumalanga, and Zimbabwe’s Mimosa, which it shares with Sibanye-Stillwater — are also unaffected by the restructuring.
Van Graan said the market would take some time to warm to the Zimbabwe story. “SA investors in particular are more sceptical”, he said.