Bloomberg News

Implats Assessing Shafts’ Viability as More Become Unprofitable

May 02, 2013

Impala Platinum Holdings Ltd. (IMP), the world’s second-biggest producer of the metal, said more of its shafts are producing at a loss as prices decline and costs rise.

“The steep drop in platinum group metal prices has had a further significant impact on group profitability with a growing number of shafts either marginal or loss making,” the Johannesburg-based company, known as Implats, said in a statement today. “These units are being monitored on a continuous basis to determine their ongoing viability.”

Average costs increased 23 percent to 15,957 rand ($1,766) an ounce for the nine months through March from a year earlier, Implats said. Output climbed 12 percent to 1.21 million ounces compared with a year ago, when a six-week strike at its Rustenburg mine, the world’s largest for platinum, cut output.

Producers in South Africa are struggling with higher costs as strikes led to above-inflation wage gains, while demand wanes. Anglo American Platinum Ltd. (AMS), the world’s biggest producer of the metal, will next week announce the outcome of three months of discussions with the mines ministry on plans to cut 400,000 ounces of platinum production annually, or 7 percent of global output, to help return to profitability.

The bulk of Impala’s increase in costs “was due to inflation, with the balance due to lower costs incurred during last year’s illegal strike without a corresponding increase in volumes this year,” the company said.

The stock declined 3.1 percent to 118.62 rand, the lowest in more than a week, by 1:25 p.m. in Johannesburg. Platinum climbed for the first time in three days, adding 0.5 percent to $1,483.85 an ounce in London.

To contact the reporter on this story: Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net


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