Impala’s CEO Nico Muller discusses 13,000 planned retrenchments, dealing with an oversupplied platinum market

Impala Platinum, also known as Implats, has faced a challenging year with full-year earnings negatively impacted by impairments of R13.6 billion, mainly due to the restructuring of Impala Rustenburg. The company's CEO, Nico Muller, spoke to CNBC Africa's Karabo Letlhatlha about the planned retrenchments and the adjustments being made to navigate an oversupplied platinum market. Muller highlighted the company's efforts to manage costs effectively, with a focus on reducing operating costs at the Impala-Rassenburg operations. The restructuring plan includes reducing the number of shafts from 11 to 6, with the goal of lowering platinum production costs from 29,000 rand to around 24,500 rand per ounce over the next two years. This reduction will involve labor cutbacks and other cost-mitigating measures. While the market has been focused on achieving a sustainable return on investment price for platinum, Muller emphasized that Implats is developing strategies to operate sustainably around current spot prices, rather than expecting short to medium-term price escalation. He acknowledged the challenges posed by negative market sentiment towards diesel and combustible engines, but expressed optimism in the long-term demand for PGM metals, particularly platinum. Muller also highlighted the potential for platinum to substitute palladium in gasoline engines, indicating a positive outlook for the industry. Despite global market oversupply, Muller pointed out that platinum price behavior is influenced more by sentiment than supply-demand dynamics. The company's restructuring efforts, which include cutting 250,000 ounces per annum from the market, may not have a significant impact due to broader market factors. Addressing the planned retrenchments affecting 13,000 jobs, Muller emphasized Implats' commitment to responsible engagement with unions and government stakeholders to mitigate the social and economic impacts on host communities. He stressed the importance of preserving the economic viability of Rustenburg to safeguard an additional 27,000 positions within the local workforce. Muller also discussed the recent devaluation of the Rand, which has benefited Implats by strengthening its financial position. Despite challenges posed by a weakened platinum price, the company's revenue from a basket of metals, including palladium, rhodium, and nickel, has remained stable. Muller reassured shareholders about the company's focus on profitability, citing positive developments at Marula and the potential long-term rewards for investors. Shareholders have expressed support for Implats' restructuring efforts, although concerns remain about the company's balance sheet and funding capabilities. Muller remains confident in Implats' ability to fund the restructuring process through existing resources, including cash reserves, debt facilities, and dividend income.