Impala Platinum's Production Rises, But Profitability Dives

Impala Platinum's

Market Conditions Lead to Sharp Decline in Financial Performance

South African platinum group metals (PGM) producer Impala Platinum (Implats) experienced a notable increase in production for the financial year ending June 30, 2024. Output at the company’s managed operations rose by 21% year-over-year to 2.92 million ounces, largely driven by the integration of Impala Bakofeng’s production following the acquisition of Royal Bakofeng Platinum in July 2023. Excluding the new acquisition, like-for-like production increased by 2%.

Total Group 6E production, which encompasses joint ventures, climbed by 13% to 3.65 million ounces, though it decreased by 1% on a like-for-like basis. Processing capacity faced challenges due to a scheduled furnace rebuild at Impala Rustenburg, which commenced in December 2023 and was completed in April 2024. Additionally, a new furnace at Zimplats, Implats’ Zimbabwean operations, is expected to be commissioned in the first half of the 2025 financial year, aiding in the release of excess inventory over the 2025-27 period.

Despite these operational advancements, the company’s profitability took a significant hit. The rand revenue per 6E ounce sold fell by 31% to 24,542 rand ($1,389). A 16% increase in 6E sales volumes to 3.4 million ounces was insufficient to counterbalance the low sales prices, leading to a 76% drop in gross profits to R5.4 billion and a basic earnings loss of R17.3 billion. The decline in prices has been attributed to inventory destocking by industrial and automotive end users, metal discounting due to shifting trade flows from west to east, and overall negative sentiment among precious metals investors.

In response to the ongoing challenging market conditions, Implats, in partnership with African Rainbow Minerals, has decided to place the new Merensky Mine and concentrator at Two Rivers on care and maintenance. This project, originally slated to produce 180,000 ounces of 6E concentrate annually, will halt operations once the processing plant is completed and commissioned in the first quarter of 2025.