Integrated Annual Report 2017

Key features for the year

Operational

  • Gross refined platinum production increased by 6.4% to 1.53 million ounces
  • Disappointing production at Impala Rustenburg and Marula
    • Restructuring review underway for a return to profitability under new normal pricing environment
  • Outstanding operational performances from Zimplats, Two Rivers, Mimosa and IRS
  • Group unit cost increase was contained at 4.4%.

 Key features
Key features

Financial

  • Basic headline loss of 137 cents per share
  • Earnings impacted by impairment of R10.2 billion
  • Balance sheet strengthened with gross cash of R7.8 billion, and unutilised facilities of R4 billion available until 2021.

Safety

  • Fatal accidents remain a concern at Impala
  • Improved safety performances at Zimplats, Marula, Mimosa and Two Rivers.

 

Key features

Market

  • Overall PGM demand stable, while supply remains constrained
  • Current platinum price disconnected to market fundamentals.

Mineral Resources and Mineral Reserves

  • No material change in Mineral Resources totalling 191.6 million platinum ounces and Mineral Reserves of 22.4 million platinum ounces.

 

/ How we react to this / CEO’s outlook – Nico Muller

It is a tremendous honour for me to join Implats as its CEO. Implats has been a Group that I have admired and it’s certainly a career highlight for me to be given the opportunity to work alongside the existing team.
Nico Muller, CEO

Turnaround Impala Rustenburg

I fully understand the importance of a turnaround at Impala Rustenburg. We are focusing on right-sizing and optimising this operation’s operating model. Strengthening and realigning the management team to ensure effective and confident leadership is imperative to drive an improved performance orientation and increased accountability to enhance safe production volumes and overall efficiencies and productivities. The importance of the expected delivery of production and cost from the two growth shafts – 20 Shaft and 16 Shaft – is recognised and plans have been re-focused to ensure their ramp ups are prioritised and achieved timeously.

Decisive Marula strategy

I have also started working with our team to ensure a more decisive strategy for the Marula operation. It is critical that we address operational disruptions and improve productivity. While this situation stems largely from community unrest and external interferences, I have made it clear that the operation must become cash generative within the immediate short term, or we will have no option but to suspend operations.

Increase organisational effectiveness

To ensure shareholder returns and the delivery of cost effective ounces we need to increase organisational effectiveness. Senior leadership changes have, and will continue, to be made across the Group, and we will improve role clarity and accountability. I have found that inter-divisional relationships and collaboration require improvement, and systems are being introduced to make these more effective and value-adding. Implats’ wellknown and regarded lean operating structure has led to an inadequate human resources function at the centre. We are in the process of securing the services of a human resources professional who will be tasked with driving organisational change and effectiveness, and ensuring the prioritisation of this function throughout the organisation.

Capital allocation and cash management

One of the core pillars of our strategy has been to strengthen the balance sheet and this has necessitated an enhanced focus on capital allocation and cash management. The finance team, led by Brenda Berlin, has done an exceptional job ensuring that Implats has one of the best-in-sector balance sheets and this focus will be maintained. This strength is, and will be, a critical element of our ambition to develop strategic agility, Turnaround Impala Rustenburg Decisive Marula strategy Increase organisational effectiveness Capital allocation and cash management and will be equally important as we re-examine the Impala Rustenburg investment case, and continue to drive the enforcement of strict capital allocation. The flexibility that will be required can’t be overemphasised as it will become the catalyst to enable us to prioritise profitability.

Develop strategic agility

It is imperative we develop the Group’s strategic agility. To initiate this, we are re-examining market dynamics, specifically our long-term price forecasts. We need to rebalance our portfolio of assets and are currently completing an assessment aimed at enhancing our strategic optionality within and beyond the current portfolio. The assessment is reviewing all operations and will result in the elimination of loss-making production, while questioning the future dependence on high-cost deep, conventional mining operations.

Maintain social licence to operate

Companies can no longer be successful without earning a social licence to operate. A tremendous amount of excellent work has been done to facilitate acceptance within our host communities and to secure our relationship with government and other authorities. This will remain a key focus area as commitments to responsible environmental stewardship and the well-being of employees are unwavering. Cost management necessitated that we hold back on appointing an experienced stakeholder relations executive, after the previous incumbent departed. The need to enhance and expand this area, however, has become a key requirement and we are in the process of securing this necessary skill for our executive team.

/ Our Company, Implats / Our operations

South Africa

operations

Impala

Impala, Implats 96%-owned primary operational unit, has operations situated on the western limb of the world-renowned Bushveld Complex near Rustenburg in South Africa. This operation comprises a 13 shaft mining complex and concentrating and smelting plants. The base and precious metal refineries are situated in Springs, east of Johannesburg.
Impala FIFR
0.079
TIFR
15.44
Impala Refined platinum production 654 600oz
Headline loss R2 681 million
Net cash used in operating activities R(545) million
Headline earnings R83 million
Capital expenditure R2 472 million
Mineral Resources 57.9Moz Pt includes RBR JV
Impala Number of employees 42 253

Marula

Marula is 73% owned by Implats and is one of the first operations to have been developed on the relatively under-exploited eastern limb of the Bushveld Complex in South Africa. Marula is located in the Limpopo province, some 50 kilometres north west of Burgersfort.
Impala FIFR
0.103
TIFR
22.74
Impala Refined platinum production 68 100oz
Headline loss R737 million
Net cash used in operating activities R(577) million
Capital expenditure R113 million
Mineral Resources 10.7Moz Pt
Impala Number of employees 3 817

Two Rivers*

Two Rivers is a joint venture between African Rainbow Minerals (51%) and Implats (49%). The operation is situated on the southern part of the eastern limb of the Bushveld Igneous Complex some 35 kilometres southwest of Burgersfort in Mpumalanga, South Africa.
Impala FIFR
0.000
TIFR
3.4
Impala Refined platinum production 177 400oz
Headline loss R636 million
Mineral Resources 22.4Moz Pt
* Non-managed

IRS

Impala Refining Services is 100% owned by Implats. It is a dedicated vehicle to house the toll refining and metal concentrate purchases built up by Implats. IRS provides smelting and refining services through offtake agreements with Group companies (except Impala) and third parties. IRS is situated in Springs, east of Johannesburg.
Headline loss R1 275 million
Net cash from operating activitiesR1 060 million


Zimbabwe

operations

Zimplats

Zimplats is 87% owned by Implats and its operations are situated on the Zimbabwean Great Dyke southwest of Harare. Zimplats operates four underground mines and a concentrator at Ngezi. The Selous Metallurgical Complex (SMC), located some 77 kilometres north of the underground operations, comprises a concentrator and a smelter.
Impala FIFR
0.000
TIFR
0.41
Impala Refined platinum production 266 400oz
Headline loss (attributable)R576 million
Net cash used in operating activities R765 million
Capital expenditure R863 million
Mineral Resources 108.5Moz Pt
Impala Number of employees 5 942

 

Mimosa*

Mimosa is jointly held by Implats and Sibanye. Its operations are located on the Wedza Geological Complex on the Zimbabwean Great Dyke, 150 kilometres east of Bulawayo. The operation comprises a shallow underground mine, accessed by a decline shaft, and a concentrator.
Impala FIFR
0.114
TIFR
0.68
Impala Refined platinum production 116 600oz
Headline profitR393 million
Mineral Resources 6.9Moz Pt
* Non-managed

 

 

Africa-map

Implats is a leading producer of platinum and associated platinum group metals (PGMs).

Total Implats
FIFR
0.074
TIFR
13.14
Refined platinum production 1 529 800oz
Headline loss R983 million
Net cash from operating activities R83 million
Capital expenditure R3 434 million
Mineral Resources 191.6Moz Pt
Number of employees 52 012

/ Our Company, Implats / Our operations

South Africa

operations

Impala

Impala, Implats 96%-owned primary operational unit, has operations situated on the western limb of the world-renowned Bushveld Complex near Rustenburg in South Africa. This operation comprises a 13 shaft mining complex and concentrating and smelting plants. The base and precious metal refineries are situated in Springs, east of Johannesburg.
Impala FIFR
0.079
TIFR
15.44
Impala Refined platinum production 654 600oz
Headline loss R2 681 million
Net cash used in operating activities R(545) million
Headline earnings R83 million
Capital expenditure R2 472 million
Mineral Resources 57.9Moz Pt includes RBR JV
Impala Number of employees 42 253

Marula

Marula is 73% owned by Implats and is one of the first operations to have been developed on the relatively under-exploited eastern limb of the Bushveld Complex in South Africa. Marula is located in the Limpopo province, some 50 kilometres north west of Burgersfort.
Impala FIFR
0.103
TIFR
22.74
Impala Refined platinum production 68 100oz
Headline loss R737 million
Net cash used in operating activities R(577) million
Capital expenditure R113 million
Mineral Resources 10.7Moz Pt
Impala Number of employees 3 817

Two Rivers*

Two Rivers is a joint venture between African Rainbow Minerals (51%) and Implats (49%). The operation is situated on the southern part of the eastern limb of the Bushveld Igneous Complex some 35 kilometres southwest of Burgersfort in Mpumalanga, South Africa.
Impala FIFR
0.000
TIFR
3.4
Impala Refined platinum production 177 400oz
Headline loss R636 million
Mineral Resources 22.4Moz Pt
* Non-managed

IRS

Impala Refining Services is 100% owned by Implats. It is a dedicated vehicle to house the toll refining and metal concentrate purchases built up by Implats. IRS provides smelting and refining services through offtake agreements with Group companies (except Impala) and third parties. IRS is situated in Springs, east of Johannesburg.
Headline loss R1 275 million
Net cash from operating activitiesR1 060 million


Zimbabwe

operations

Zimplats

Zimplats is 87% owned by Implats and its operations are situated on the Zimbabwean Great Dyke southwest of Harare. Zimplats operates four underground mines and a concentrator at Ngezi. The Selous Metallurgical Complex (SMC), located some 77 kilometres north of the underground operations, comprises a concentrator and a smelter.
Impala FIFR
0.000
TIFR
0.41
Impala Refined platinum production 266 400oz
Headline loss (attributable)R576 million
Net cash used in operating activities R765 million
Capital expenditure R863 million
Mineral Resources 108.5Moz Pt
Impala Number of employees 5 942

 

Mimosa*

Mimosa is jointly held by Implats and Sibanye. Its operations are located on the Wedza Geological Complex on the Zimbabwean Great Dyke, 150 kilometres east of Bulawayo. The operation comprises a shallow underground mine, accessed by a decline shaft, and a concentrator.
Impala FIFR
0.114
TIFR
0.68
Impala Refined platinum production 116 600oz
Headline profitR393 million
Mineral Resources 6.9Moz Pt
* Non-managed

 

 

Africa-map

Implats is a leading producer of platinum and associated platinum group metals (PGMs).

Total Implats
FIFR
0.074
TIFR
13.14
Refined platinum production 1 529 800oz
Headline loss R983 million
Net cash from operating activities R83 million
Capital expenditure R3 434 million
Mineral Resources 191.6Moz Pt
Number of employees 52 012

/ Our Company, Implats/ Stakeholder review and engagement

Each stakeholder group is allocated an executive or champion responsible for managing their relationship with the organisation.

Stakeholders are defined as those people or groups who are interested and affected by our business, as well as those who have a material influence on our ability to create value.

We have undertaken an inclusive stakeholder review process with the primary objective of improving relationships by becoming proactive in our approach to building relationships.

This process is depicted as follows:

  • Identifying all stakeholders
  • Prioritising stakeholders according to our impacts on them and the nature of the relationship
  • Determining their level of influence on the business
  • Mapping each stakeholder against a designated champion or responsible executive
  • Defining the method of engagement and identifying potential opportunities to grow and sustain the relationship
  • Establishing a tool for monitoring and evaluating relations in order to take proactive measures to improve these where they are found lacking

/ How we react to this / Implats’ performance

Our strategy seeks to sustain optimal levels of safe production at the best possible cost thereby positioning Implats:

  • In the lower end of the cost curve
  • With strategic optionality
  • To benefit from future stronger PGM prices
  • To reward stakeholders

KPI OVERVIEW

Operational strategies
Performance target for FY2017
Performance against strategy and KPIs
Relentlessly drive the safety of our people

Zero fatalities

LTIFR: 20% improvement on FY2016

Regrettably, nine employee fatalities were recorded during the year. LTIFR improved 8.8% from the previous year to 5.92 per million man-hours worked (including contractors) (2016: 6.49).

Despite a keen focus on safe operational performance, safety remains a significant challenge.

Human behaviour has been identified as contributing to many safety incidents.

Our focus is on ensuring effective leadership and responsible behaviour and driving a culture of personal accountability and interdependence.

graph
Consistently deliver production targets

>1.5 million platinum ounces

Refined platinum production of 1.53 million ounces.

Group platinum production reached the highest output achieved in several years. This pleasing production result was driven by excellent performances from most operations, despite suboptimal performances from Marula and the Impala Rustenburg, and supplemented by record tolling throughput at Impala Refinery Services (IRS).

 

graph
Improve efficiencies through operational excellence

Cost per platinum ounce < R21 200

Unit costs contained at a 4.4% increase from the previous year to R22 691 per platinum ounce impacted by lower mine-to-market volumes.

Reduced operating costs has resulted in a savings of more than 1.0 billion over the last two years with further initiatives being pursued to keep costs below inflation.

graph
Cash conservation
Capital < R4.4 billion

Capital expenditure was maintained at similar levels to the previous year due to the deferment of ongoing capital in a low price environment and 17 Shaft remaining on low-cost care and maintenance.

R1.1 billion was spent on the two development shafts, 16 and 20 .

 

graph
Maintain our licence to operate

Rustenburg SO2 at <16tpd

Build a further 300 employee houses in Rustenburg

Complete high school at Platinum Village

 

SO2 emissions at Rustenburg at 16.3tpd.

Direct SO2 emissions were within the conditions of the Air Emission Licence at Rustenburg. Built 321 employee houses in Rustenburg.

Completed both high and primary schools at Platinum Village in time for new 2017 school year.

Group social development expenditure amounted to R402m.

graph

/ Downloads

Much of our 2017 IAR has been designed and laid out in spreads. Below are options of downloading a pdf in spreads or when viewing the single page pdf please do so in two-page view in order to get the best possible picture.