ROYAL Bafokeng Platinum (RBPlat) is to close an unprofitable shaft at its Bafokeng Rasimone Platinum Mine (BRPM) which it shares in joint venture with Anglo American Platinum (Amplats), and will cut capital expenditure by R900m in an effort to survive a further retreat in platinum group metal (PGM) prices.
Commenting in its interim report for the six months ended June 30, in which the group posted a headline loss of 5.3 cents per share (2016: 77.8 cents profit), an annual saving of R118m would be realised at BRPM as a result of the shaft closure. The restructuring was “effected” from July 31.
RBPlat alerted the market in its year-end results presentation for the 2016 financial year in February that a restructuring of BRPM was on the cards amid a sluggish market for PGMs. Today’s announcement details a plan in which the South shaft UG2 production sections will be shut and some 60% of its employees redeployed to mine higher grade Merensky sections at the mine’s South and North shafts, and UG2 production at North shaft.
There would be retrenchments, however. The restructuring comes at a delicate time for South Africa’s mining sector following similar retrenchment announcements at AngloGold Ashanti and Bokoni Platinum Mines (another of Amplats’ joint ventures) which could account for up to 12,000 job losses.
The Chamber of Mines said in a statement yesterday that a combination of higher administered costs, regulatory uncertainty, inappropriate work stoppages and the poor market for certain metals could result in the loss of 100,000 direct jobs in the mining sector and the loss of another 100,000 indirect jobs.
It calculated that between 2014 and 2016, the South African mining industry had made an accumulative net loss of about R50bn. Some 70,000 jobs had been lost in the sector between 2012 and 2016. “It is unfortunate that the industry received little support from other stakeholders and was left to battle the crisis and try to remain viable on its own,” the Chamber said in its statement.
This was in response to a statement by the National Union of Mineworkers that railed against the job losses, saying the mining sector had prioritised profit-making over protecting jobs.
Said RBPlat of the restructuring: “This will enable us to maintain current levels of PGM production but with the enhanced effect of the base metals revenue that accompanies Merensky production and optimized processing arrangements equating to approximately R37m per annum”.
Capital expenditure for the second half of the year was guided to R1.5bn with most of the outlay going into the construction of the R11bn Styldrift I project on which R7.23bn had been spent to date. The project was scoped to double RBPlat’s production to about 600,000 ounces of platinum group metals a year.
On a full-year basis, a total of R2.3bn will be spent which compares to initial guidance of R3.2bn. The capex guidance is for the entire joint venture which RBPlat foots with Amplats.
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