Impala Platinum’s Zimbabwean unit, Zimplats, has joined Sibanye-Stillwater in retrenching workers as a bleak outlook on platinum group metal (PGM) prices persist.
The big South African PGM producers have operations in Zimbabwe, with Sibanye-Stillwater jointly owning Mimosa mine with Implats. Anglo American Platinum wholly owns Unki Platinum mine while Implats controls Zimplats.
Zimplats has tabled a voluntary retrenchment package to its workers while Mimosa mine has also retrenched management-level employees. This is in response to subdued platinum prices, a factor that has already resulted in a jobs bloodbath from the PGM sector in South Africa.
Alex Mhembere, the CEO of Zimplats, said the voluntary retrenchment exercise that Zimplats had embarked on was in addition to cash-preservation and cost-containment measures already implemented by the company.
“While our cost containment and cash preservation programmes yield expected results, the company’s situation remains difficult and therefore additional measures still need to be undertaken. One of the measures that the company is set to implement is a voluntary retrenchment exercise for all employees wishing to be considered,” Mhembere said in a note to employees dated March 18, 2024.
Such an initiative would “mitigate the need for compulsory retrenchment”. Those opting for voluntary retrenchment would be granted two weeks’ pay for every completed year, one-month’s notice pay and “minimum guaranteed package of three months for employees whose retrenchment package is less than three months.
Earlier this year, Zimplats said its operating environment characterised by softening metal prices was affecting its financial performance. In response to this, Zimplats had “instituted a number of survival strategies with stringent measures to contain costs and preserve” and it seems this has not yielded much respite for the company, prompting it to go for voluntary retrenchments.
In the half year to December, revenues at Zimplats dropped 32% to $372.8 million (R7 billion), translating to a 94% fall in profits before tax to $14.2m. In the post-tax indicator, Zimplats swung to a loss of $8.8m against an earlier same period profit of $159.6m.
“The Zimbabwe platinum operations had shown some resilience owing to their low-cost nature but things have just been worsening on the commodity prices-front to the extent that management now has to start thinking about the best possible approaches to laying off employees.
“It’s a delicate call but with operations sinking into losses, it was inevitable that there will be job losses and more retrenchments are likely as long as the low prices persist,” said a manager with a Zimbabwean PGM company.
Mimosa mine has also had to preserve cash. Earlier this month, Mimosa retrenched managerial and supervisory employees.
“The outlook is that the prices will remain depressed in the medium term. In view of this, we have had to implement several measures to ensure our business remains viable in the low-price metal environment,” the company said in a statement. “This has resulted in a staff rationalisation exercise, affecting 33 managerial and supervisory employees.”
It added, however, that “no further rationalisation of the permanent staff complement is planned” at this stage.
Mimosa has paused a $100m expenditure programme to develop the new North Hill project, which has a resource base of some 1.5 million ounces of platinum that had been earmarked to replace the current South Hill mining area when it exhausts its life of mine.
BUSINESS REPORT