JOHANNESBURG (miningweekly.com) – South Africa’s second-largest platinum mining company has initiated a process that may lead to 2 500 staff reductions at its lossmaking Impala Rustenburg operation, where financial sustainability has deteriorated significantly in recent years. 

The Johannesburg Stock Exchange-listed Impala Platinum (Implats) said on Monday that it had issued a notice to relevant employee representative groups, government authorities and other stakeholders of its initiation of a Section 189 consultation process in terms of the Labour Relations Act, aimed specifically at ensuring the sustainability of the Impala operations, which currently employ some 31 000 people. 

The company, headed by CEO Nico Muller, is experiencing severe financial pressures largely as a result of persistently low metal prices in rands and continued production cost increases.

At the same time, Impala Rustenburg is encountering declining labour productivity rates, with production falling from an historical base of some 1 000 000 oz of platinum a year to the 680 000 oz to 720 000 oz forecast for the current financial year ending June 30, 2018. 

“Unfortunately, we’re now left with no further option in the prevailing operating environment but to consider further restructuring processes that may lead to a reduction in the number of employees,” Muller said in a release to Creamer Media’s Mining Weekly Online.

While 2 500 jobs could be affected in the near term, further optimisation processes may also be required in future to ensure the continued sustainability of the operation.

“It must be emphasised that no final decision has been taken as regards the proposed restructuring, and no final decision will be taken prior to full and proper consultation with affected employees, and their representatives, in compliance with the Labour Relations Act,” added Muller, who told Mining Weekly Online that important steps to effect greater strength of leadership within the Impala Rustenburg operation had already been taken.

Implats reported last week that it was in the first phase of the review of an intended restructuring of Rustenburg after its headline earnings per share plunged to a 137c a share loss in the 12 months to June 30.

The loss was recorded despite ongoing cost saving and optimisation initiatives that had been implemented in a failed bid to restore profitability and secure continued full employment.

As a consequence, a priority target of returning Impala to at least a cash neutral position by 2019 has now been set, which incorporates an assessment of each shaft and production area.

This action is expected to simplify the intricate current operation and potentially lead to the disposal or suspensions or harvesting of marginal and lossmaking shafts.

Meanwhile, Impala's leadership has been strengthened and realigned to ensure that a fit-for-purpose team is in place to drive performance, increase production volumes and improve productivity.

On the cards is the rebuilding of the entire operating methodology and culture at Rustenburg, where the delegation of authority and accountability to lower levels is anticipated.

Currently, decision-making is seen as being excessively centralised, with the changes already undertaken giving rise to early signs of improvement.