Implats is a leading producer of platinum group metals (PGMs) structured around seven mining operations and a refining business, Impala Refining Services.
Implats is a leading producer of platinum group metals (PGMs) structured around seven mining operations and a refining business, Impala Refining Services.
INTRODUCTION
Implats delivered guided production volumes and commendable cost controls despite navigating several serious challenges amid a constrained operating environment characterised by macro-economic headwinds and persistently low prices for platinum group metals (PGMs). The journey to zero harm suffered a significant set-back, with the Group's safety performance dominated by the devastating 11 Shaft tragedy at Impala Rustenburg in November 2023.
Key strategic projects at the Group's mining and processing operations were successfully advanced and the construction of its flagship renewable energy project – the largest solar power plant in Zimbabwe – was completed. Together with water security and community investment initiatives progressed in the period, Implats continued to demonstrate its overarching commitment to environmental stewardship and long-term sustainability.
The acquisition of the remaining shareholding in Royal Bafokeng Platinum Limited (RBPlat), now Impala Bafokeng, was also concluded in the period. The Group's landmark broad-based black economic empowerment (B-BBEE) transaction at Impala and Impala Bafokeng was completed for value and has broadened economic participation of key stakeholders in our mining and processing assets.
Significantly weaker US dollar sales revenue offset the benefit of strong operational delivery in FY2024 – average palladium and rhodium pricing dropped sharply, negating higher sales volumes and compressing operating margins and free cash flow. Financial metrics were further impacted by impairments resulting from lower PGM pricing, as well as several once-off cash and non-cash charges arising from the conclusion of the RBPlat and B-BBEE transactions and the labour restructuring initiated during the period.
Implats generated EBITDA of R12.4 billion, headline earnings of R2.4 billion or 269 cents per share and recorded a free cash outflow of R4.0 billion, after incurring cash capital spend of R12.3 billion in the period. Our strong balance sheet positioning was sustained with closing adjusted net cash of R6.9 billion.
FY2025 started with labour restructuring completed, Group operations set up to deliver free cash flow – despite the assumption of continued near-term PGM pricing weakness – and Implats' suite of processing assets well capitalised and able to draw down previously accumulated in-process inventory and release cash to the Group.
SAFETY
Implats' purpose, to create a better future, is underpinned by the Group values – to respect, care and deliver – and forms the foundation of its safety culture. Health and safety are a top priority for management, teams and individuals. An increased focus on visible-felt leadership and accountability remains key to addressing mindsets and safety behaviours and driving the desired culture of safety adherence.
Implats' safety performance was dominated by the 11 Shaft tragedy in the first half of the year, in which 13 employees lost their lives and a further 73 employees were injured following an accident involving a personnel conveyance. Good progress was made on rehabilitating the injured and seven employees completed their medical treatment and successfully passed their functional work assessment evaluations. The remaining employees continue with their rehabilitative treatment.
All impacted employees continue to receive counselling and therapy according to their respective rehabilitation requirements. In addition, the Group's long running We Care programme provides ongoing support to the families of the deceased, including financially supporting the children of our late colleagues, from birth through to the completion of their tertiary studies.
With deep regret, we report that an additional six employees lost their lives in unrelated incidents at managed operations in FY2024, bringing the Group's reported fatalities to 19 in the period. As a result, Implats' fatal-injury frequency rate deteriorated to 0.127 per million man-hours worked (FY2023: 0.040). The board of directors and management team have extended their heartfelt condolences to the families of our deceased colleagues and the Group offers them ongoing support.
Investigations into the 11 Shaft incident are ongoing. The in loco inspection was conducted in December 2023, following which Implats proceeded with further investigations and began the necessary repairs to damaged infrastructure under the direction of the Department of Mineral Resources (DMR). In January 2024, Impala submitted its investigation report to the DMR, in terms of section 11(5)(e) of the Mine Health and Safety Act, which paves the way for the DMR to initiate formal proceedings relating to the incident. The formal proceedings are expected to take several months to complete.
In parallel, Implats conducted its own investigations, drawing on observations and findings from the regulated investigation, and exploring potential interventions to further enhance the safe operation of all conveyance systems across the Group. This investigation, which was governed by internal, industry and regulatory protocols and procedures, has been concluded and is with a third party for verification.
The lost-time injury frequency rate (LTIFR) improved by 1% to 3.89 per million man-hours worked and the Group recorded a 10% improvement in the total-injury frequency rate (TIFR) to 8.29 in FY2024.
While Implats' safety and operational risk strategy compares favourably with other leading miners and addresses all relevant key safety enablers, the Group interrogated its safety procedures and intensified measures to further embed fatal risk prevention in the operating culture at all operations. Among others, the focus areas include improving the methodology and quality of planning, enhanced early entrance examinations, accelerating the fatal risk control protocols, capacitating managers and supervisors and addressing the high turnover in these roles, and an increased focus on the critical safe behaviours for each role, particularly those in high-risk work areas. Visible-felt leadership was increased, as was on-the-job training and frontline coaching. These initiatives were supported by Group-wide safety summits held in November 2023, facilitated by independent third parties, and a second summit in May 2024.
The Group is actively embedding a safety-conscious culture at all operations, one that emphasises care, individual accountability and collaboration. The commitment to employee wellbeing and protection is multi-faceted and includes robust systems and processes to ensure proactive risk management and continuous process improvements, as well as empowering employees to actively collaborate on safety improvements and technology adoption.
STRATEGIC DELIVERY
Implats' value-focused strategy seeks to facilitate the agility and resilience necessary to navigate a dynamic global, operating and metal price environment, enabling the Group to serve the evolving markets for its primary products and create and share value for its key stakeholders.
Despite robust demand for our primary products, the PGM peer group has experienced meaningful and sustained margin compression due to significant pricing dislocations caused by:
The Group's strategic imperatives are premised on delivering a robust and resilient portfolio, underpinned by prudent capital allocation and supported by a strong and flexible balance sheet. These principles guided management action over the past year to deliver a range of strategic responses to ensure that Group production and planning parameters were proactively adjusted to sustain business viability, enhance competitive positioning and deliver optimal returns and shared value for all stakeholders.
Implats has benefited from past investment into its people and assets, which underpinned the strong operational delivery at its key mining and processing assets in the period and provided the flexibility to take measured action in response to soft metal pricing, minimise cash outflows and limit the use of the balance sheet to cross-subsidise loss-making operations.
Constrained PGM pricing required a critical focus on capital expenditure, with the project portfolio geared towards ensuring asset integrity, preserving operational flexibility and efficiency, maintaining ore reserve flexibility and ensuring statutory compliance. Projects key to advancing Implats' strategic aspirations in both beneficiation and renewable energy were prioritised for completion.
During FY2024, a Group restructuring process commenced to rationalise and optimise labour deployment with appropriate staffing levels across corporate and operational functions. Labour restructuring at Impala Canada and Zimplats was completed, and a section 189(3) consultation process (S189) was initiated during Q4 FY2024 across the South African managed operations – Impala Rustenburg, Impala Bafokeng, Marula and the corporate office – and completed in July 2024. Natural attrition, together with re-deployment, reskilling efforts and the uptake of voluntary separation packages, ensured no employees were forcibly retrenched.
In addition, operational strategies for several assets were amended:
Sustainable development remains at the heart of our strategy and Implats is resolute in progressively enhancing its environmental practices while contributing to socio-economic benefits for all stakeholders. Key renewable energy, water security and community infrastructure and upliftment initiatives were delivered and the Group's overarching commitment to environmental stewardship and broader sustainability remains unchanged, despite the constrained operating environment.
Against the backdrop of a challenging year, Implats was proud to conclude a strategic B-BBEE transaction ensuring broad-based ownership in the mine-to-market PGM value chain. Equity ownership at Impala (including Impala Refining Services) and Impala Bafokeng is via an employee share ownership trust (4%), a community share ownership trust (4%) and a strategic empowerment consortium, Bokamoso (5%), led by Siyanda Resources Proprietary Limited (Siyanda).
Implats continues to monitor and evaluate the future demand landscape for its primary PGM and associated base metal production, ensuring the current and future asset portfolio allows the Company to adapt and thrive in a cyclical sector, which faces both existential threats and tremendous opportunities as demand patterns shift in response to the global imperative to decarbonise.
Current efforts are centred on the consolidation of the existing portfolio – and assessing incremental partnerships and transactions to improve our competitive positioning and leverage our processing assets.
Key projects
Over the past five years, Implats has invested significantly in a series of mine replacement, growth, environmental and processing projects to strengthen the competitiveness of its portfolio. A full review of capital expenditure was undertaken, and where required, investment plans were adjusted to the current reality of weak PGM pricing. As such, the focus during the year was on prioritising delivery of the growth and replacement projects that enhance Implats' competitive positioning, securing processing flexibility and reducing the Group's carbon footprint, utility costs and energy dependency.
Construction on several key capital projects will start in FY2025 to improve operational efficiency and flexibility, including a chrome recovery plant and a tailings retreatment plant at Impala Bafokeng, a ventilation upgrade at Impala Rustenburg's 14 Shaft, an additional matte ball mill at the base metal refinery, and Phase 2 solar at Zimplats.
For the year ahead, there is an intensified focus on reducing stay-in-business capital across all operating subsidiaries, while preserving operational efficiency through ore reserve positioning, infrastructure integrity and statutory compliance. This, combined with improved capital intensity at Impala Canada, deferring spend on Marula's Phase 2 project and tapering spend at several growth projects, will result in Group capital expenditure of approximately R9 billion per annum over the medium term.
Mine replacements and upgrades
Zimplats' development project at Mupani Mine will provide replacement volumes for Rukodzi and Ngwarati mines, on their respective depletion. The project is on schedule to achieve production of 2.2 million tonnes per annum in FY2026, which represents full replacement of Rukodzi and Ngwarati, with design capacity production of 3.6 million tonnes per annum planned for FY2029. The upgrade to Zimplats' Bimha Mine, which will partly replace tonnage from Mupfuti Mine on depletion in FY2028, was completed during the year, increasing the mine's design capacity to 3.1 million from 2.2 million tonnes per annum.
Impala Rustenburg's R460 million project to refurbish and upgrade the 12 Shaft decline, including trackless and track-bound fleet, was completed in May 2024, and good progress was made on its R220 million project to create four UG2 half levels at 11 Shaft, due for completion during FY2027.
Zimplats' US$43 million project at the Selous Metallurgical Complex tailings storage facility (TSF), to extend the design life from 2025 up to 2049 by expanding the footprint, commenced with Phase 1 (US$25 million) in May 2021, and Phase 2A (US$18 million) in November 2023. Both phases are in progress and forecast to be completed in Q4 FY2026 and Q4 FY2028, respectively.
In response to the lower metal prices, and to preserve cash, execution on Marula's Phase 2 life-of-mine extension project was slowed. The project is expected to deliver a life-of-mine extension to FY2045.
Beneficiation
By period end, US$387 million had been spent on Zimplats' smelter expansion and SO2 abatement plant, against a total budget of US$544 million. The expanded smelter, incorporating a new 38MW furnace, will be commissioned in H1 FY2025, with the matte produced transported to IRS for refining. The SO2 abatement plant is scheduled for completion by June 2028. US$21 million of a budgeted US$190 million was spent on refurbishing the base metal refinery at Selous, with project timelines adjusted and future spending deferred in response to lower metal prices.
The refineries' project to debottleneck sections of the base metals refinery in Springs is nearing completion with final commissioning expected in H1 FY2025. The project expands beneficiation capacity by circa 10% to provide room for future growth. Phase 3 of the precious metal refinery refurbishment was completed and Phase 4 is scheduled for completion by year-end FY2027.
Impala Rustenburg's flash dryer project, which doubles the smelter's flash drying capability and yields environmental benefits, was successfully commissioned during the year.
Decarbonisation
Zimplats completed construction of the first 35MW phase of its 185MW solar power project – the Group's first large-scale project towards meeting its decarbonisation targets. The 35MW plant was tested and commissioned, with grid connection scheduled for Q1 FY2025. Zimplats already sources 88% of its energy from regional hydro-electric facilities and its proportion of renewable energy use will grow as the solar programme comes on stream. Construction of the second phase of the project, a 45MW solar plant, will start in FY2025 and is scheduled for commercial production in FY2026.
Bankable feasibility studies for the construction of a 30MW solar plant at Marula were completed and funding options are being explored. To further strengthen security of electricity supply in South Africa, while reducing greenhouse gas emissions and long-term input costs, Implats is also assessing several renewable energy solutions for its South African operations.
Growth
Together with JV partner, African Rainbow Minerals, Implats developed a new Merensky Mine and concentrator at Two Rivers, with planned annual output of 180 000 6E in concentrate. Given current market conditions and ongoing challenges faced by the asset's UG2 operations, the JV partners agreed to put the project on care and maintenance, with plans to re-evaluate a production ramp-up when market conditions improve. The processing plant will be completed and commissioned in Q1 FY2025, before operations are halted.
SUSTAINABILITY
Sustainability is core to Implats' strategy. The Group's environment, social and governance (ESG) framework captures its sustainable development aspirations and is embedded into how it conducts businesses in a transparent, ethical and accountable way. The relationships formed with employees, communities, regulators and other stakeholders are key to maintaining Implats' social licence to operate and to achieving its purpose – creating a better future. The PGMs produced from the Group's geographically diverse operations play an important role in achieving net zero. Implats is progressively reducing and mitigating its environmental impact at its own operations and across its value chain, while also investing in developing thriving communities to sustain livelihoods beyond mining. Taken together, the Group's sustainability activities and initiatives contribute towards 14 of the United Nations' Sustainable Development Goals (SDGs), which inform Implats' short- to medium-term strategy and underpins its goal to create long-term value.
ESG ratings and recognition
Health and wellbeing
Employee safety, health and wellbeing is key to achieving the Group’s goal of zero harm. Implats’ proactive approach to health and wellbeing prioritises not only its employees but also the health and wellbeing of the communities in which it operates. It does this through extensive education on health and wellness topics, vaccination and wellness outreach drives and facilitating access to its on-site medical facilities. The Group encourages its employees and their dependants to use its free-of-charge Employee Wellness Programme (EWP) for occupational and non-occupation health matters, mental wellbeing and psychosocial support, as well as their financial wellness needs.
The Group made good progress on reducing the incidence of its main occupational diseases during the period under review. Superb progress was made on reducing the incidence of tuberculosis (TB) among Implats’ workforce to a rate of 162 per 100 000 – less than half the national incidence rate in South Africa and Zimbabwe – a testament to targeted TB control measures and sustained commitment to employee wellbeing. Meanwhile, hearing conservation programmes and focused efforts to address the Covid-19 backlog in noise-induced hearing loss (NIHL) screenings led to a 33% decrease in new NIHL cases. Operations continue to make progress on re-engineering or replacing machines that emit noise levels above the 107dBA limit, providing noise-exposed employees with custom-fitted hearing protection and implementing regular awareness programmes. Implats adopted the industry-wide buy and maintain quiet initiative (IBMQI), and in partnership with the Minerals Council South Africa and other industry stakeholders, trialled hydropower rock drills and second-generation rock drill mufflers.
Managing the impacts of non-occupational diseases remains a key focus. Implats endeavours to increase uptake of anti-retroviral treatment to eliminate Aids-related deaths among in-service employees by 2025 and is committed to the UNAIDS 95-95-95 targets for the management of HIV infections, in which 95% of employees undergo awareness training; 95% of employees are tested for HIV/Aids; and 95% of HIV-positive employees are on a management/ARV programme. The Group’s voluntary counselling and testing efforts during the year led to an uptick in awareness, and the adherence rate to HIV treatment was sustained at over 95%. A daily single-dose anti-retroviral treatment regime was introduced to improve HIV management and measurably improve productivity and quality of life, with a year-on-year 3.7% improvement in viral suppression.
Support for the mental health and wellness of employees and dependants was increased in the year, given the impacts of the 11 Shaft incident and the s189 process, and received strong employee engagement. The Group also introduced a mental health and wellness policy to address and prioritise this important facet of employee wellbeing.
Implats has detected a notable rise in obesity and associated lifestyle diseases in its workforce. In response the Group has broadened the scope of screening on offer to employees to include testing for high cholesterol – in addition to diabetes and hypertension – with targeted interventions designed for those at high risk.
Environment
As an extractive and energy-intensive industry, mining and processing activities inevitably impact the natural environment. Implats is committed to ensuring responsible stewardship of natural resources. The Group seeks to demonstrate best practice in environmental management, guided by its updated environmental strategy and ESG framework. Focus areas include environmental legal compliance and management systems, water stewardship, energy and climate change, air quality, waste management and rehabilitation, mine closure and biodiversity.
The Group advanced its sustainability journey during the year under review. There were no major (level 5), significant (level 4) or limited-impact (level 3) environmental incidents (FY2023: 0, 0 and 7, respectively) and no fines or non-monetary sanctions were imposed for non-compliance with environmental regulations, licences or permits at any Group operation.
Implats is decarbonising its operations to achieve carbon neutrality by 2050, with a short-term target to reduce carbon emissions by 30% by FY2030 against FY2019 as a baseline. During the period, Implats’ total carbon emissions increased by 6% to 4 298kt CO2 following the incorporation of Impala Bafokeng operations. Carbon emission and energy use intensities improved to 0.154 CO2 tonnes per tonne milled (FY2023: 0.171) and 0.783 GJ per tonne milled (FY2023: 0.835), respectively, due to a 17% increase in milled tonnes.
Significant progress was made on increasing the use of renewable energy, despite the deferral of some projects due to the depressed metals price environment. Zimplats completed the first 35MW of its intended 185MW solar power complex. Zimplats’ hydro-power offtake agreement with the Zambia Electricity Supply Corporation was increased to 70MW from 1 January 2024, raising the operation’s consumption of renewable energy sources to 88% of its total energy usage. Impala Canada’s grid-supplied energy is 100% renewable hydropower. In total, the Group’s FY2024 renewable electricity consumption was 37% (FY2023: 30%), which resulted in Implats avoiding 356 406 tonnes of CO2 emissions (FY2023: 127 000 tonnes).
Implats’ southern African operations are in water-scarce regions, underlining the importance of minimising freshwater withdrawals and increasing water recycling and re-use. During the period, 56% (FY2023: 52%) of water used at the operations was re-used or recycled against the FY2024 target of 54%, aided by the maiden inclusion of Impala Bafokeng (which has relatively high water recycling and re-use rates), and the introduction of treated brown water sources. Several initiatives to improve water management, security and water-use efficiencies for operations, and infrastructure projects to ensure access to clean water for employees and local communities are ongoing.
Implats supports the Global Industry Standard on Tailings Management (GISTM), and annual independent tailings review board audits of the Group’s tailings storage facilities (TSFs) continue to show no significant areas of concern.
Land rehabilitation is key to managing biodiversity impacts. The Group has developed a biodiversity framework and site-specific biodiversity management plans and standards, and conducts several initiatives to protect wildlife species, control invasive alien vegetation and prevent deforestation.
Social
Implats seeks to leave a lasting positive legacy in the communities in which it operates. Mine communities, especially in southern Africa, face major socio-economic challenges and have become increasingly dependent on mining companies. Climate-change risks also present severe weather events, long-term cyclical droughts and reduced yields from subsistence agriculture. Implats is committed to sharing the economic value it creates in a bid to create self-sustaining communities, beyond mining.
The focus is on key, high-impact and strategic community investment projects which align with community needs. During the period under review, Implats spent R375 million on projects focused on community wellbeing, education and skills development, enterprise development, inclusive procurement and developing resilient infrastructure, which together benefited more than 140 000 people and supported approximately 4 800 employment opportunities.
The Group contributes to its communities through supporting several health and wellbeing, job creation and food security projects. Food insecurity remains a particular challenge among households in communities across all operating regions, especially in the southern Africa region, which is prone to cyclical long-term droughts. The Group’s food security initiatives in this region enhance community resilience in the face of the negative impacts from climate change on agriculture. At the Western Limb operations, the Sesigo food parcel distribution programme – a partnership between Impala Rustenburg and the Royal Bafokeng Nation (RBN) – supports vulnerable households and, in the longer term, aims to transition them to self-sufficiency through support initiatives.
Various agriculture support programmes are underway at the Zimplats communities and South Africa’s Western Limb operations. Zimplats’ training programme for smallholder farmers is designed to reduce their vulnerability to the effects of climate change and drought, and the three horticulture gardens it established help to create self-sufficient, food-secure communities. Impala Canada continues to support the Roots partnership which supports several Roots’ food markets for indigenous communities to bring fresh, in-season produce to the residents at affordable prices.
Gender-based violence (GBV) remains rife in South Africa and Implats continues to support national initiatives in the fight against GBV, the most recent of which is providing support to Thuthuzela Care Centres (TCCs) through the Minerals Council GBV Partnership.
Implats’ community wellbeing initiatives during the year benefited more than 25 900 people, supported 250 farmers, seven agricultural programmes, nine community health programmes and five GBV initiatives.
Education is key to ensuring community members have the necessary skills to find meaningful employment. Implats’ approach realises the importance of timeous interventions to improve early childhood development, as this is the most neglected element in the education value chain. The school support programmes run by Impala Rustenburg, Impala Bafokeng, Marula and Impala Refineries invest in the full education value chain from early childhood development to tertiary education, with the participating schools achieving matric results that outperform their district counterparts. Impala Canada provides ongoing support to various educational initiatives in its local Thunder Bay community, including multi-year donation commitments to the local university and college, as well as several educational scholarships, primarily in support of indigenous students. The Group’s education and skills development initiatives supported more than 9 700 learners during the year and provided more than 600 bursaries and learnerships for community members. Five early childhood development centres and 72 mine community schools were supported, and Implats sponsored a school sports programmes for more than 6 700 participants.
Implats’ enterprise and supplier development (ESD) and inclusive procurement efforts are focused on localising its supplier footprint, building capacity in host communities' companies to become part of Implats’ supply chain, and developing these companies to diversify their revenue base beyond Implats’ supply chain and ultimately transition beyond mining. Opportunities are set aside for community entrepreneurs to become suppliers. During the year, the Group supported 1 700 SMMEs, trained 1 600 mine-community entrepreneurs, sustained 4 000 employment opportunities and created 850 new employment opportunities.
Infrastructure projects support the Group’s wellbeing, educational and inclusive growth goals, with roads and bridges built enhancing community resilience against the negative impacts of climate change. In the period under review Implats completed 25 community infrastructure development projects, which positively impacted more than 87 000 people, created 780 jobs and provided procurement opportunities to 140 local SMMEs.
Since the Group’s industry-leading accommodation strategy was implemented in 2008, thousands of employees and their families have benefited from access to decent accommodation and wealth-creation opportunities through home ownership. Implats has spent more than R5 billion on the provision of decent housing and improving living conditions for employees since the inception of its housing programme. During the past year, 222 houses were built bringing the total number of houses built to more than 5 700, creating 6 032 first-time homeowners.
A meaningful B-BBEE transaction was introduced at Impala and Impala Bafokeng, which included the creation of a community share ownership trust (CSOT) with 4% ownership in both operations. The CSOT includes a broad range of beneficiaries from the mine host communities and will focus on education and skills development, enterprise development, community wellbeing and social and economic infrastructure.
Zimplats’ Empowerment Plan was approved by the Zimbabwean government in 2022, after which Zimplats issued equity in its empowerment companies to a CSOT. Future dividends from these companies are committed to ensuring that communities realise tangible benefits from their ownership in these companies. Community ownership fosters a common goal to create sustainable operations for the benefit of all stakeholders.
GROUP OPERATIONAL REVIEW
Implats navigated several serious challenges and a constrained operating environment to deliver guided production volumes and commendable cost controls. Achieved volumes benefited from the maiden annual consolidation of Impala Bafokeng. However, notable performances were achieved on a like-for-like basis (excluding Impala Bafokeng’s contribution) at the Group’s key mining and processing operations.
Tonnes milled at the Group’s managed operations increased by 17% to 27.89 million tonnes (FY2023: 23.88 million tonnes) and were up 1% on a like-for-like basis, with higher milled volumes at Zimplats and stable tonnage at Impala Rustenburg offsetting the impact of re-based production volumes at Impala Canada and safety-impacted throughput at Marula. 6E milled grade rose 4% to 3.73g/t (FY2023: 3.60g/t) on the consolidation of higher-grade Impala Bafokeng volumes and improvements at Impala Rustenburg. 6E production at managed operations increased by 21% to 2.92 million ounces (FY2023: 2.42 million ounces), with like-for-like gains of 2%.
The Group’s JV operations increased 6E concentrate production by 1% to 547 000 ounces (FY2023: 541 000 ounces). Mimosa benefited from plant optimisation but Two Rivers delivered lower volumes due to constrained mining flexibility from challenging geological conditions. Third-party 6E concentrate receipts declined by 34% to 191 000 ounces (FY2023: 287 000 ounces) as two contracts terminated in Q3 FY2023.
In total, Group 6E production increased by 13% to 3.65 million ounces (FY2023: 3.25 million ounces) and was 1% lower on a like-for-like basis.
Refined 6E production, which includes saleable ounces from Impala Bafokeng and Impala Canada, increased by 14% to 3.38 million 6E ounces (FY2023: 2.96 million ounces) and was 2% higher on a like-for-like basis. Mining and processing performance benefited from a notable reduction in the frequency and intensity of load curtailment in South Africa, but Zimbabwe experienced heightened electricity supply constraints. As a result, Implats estimates production of circa 21 000 6E ounces was foregone across southern African managed and JV operations in the period, while a further 12 000 6E ounces were deferred (FY2023: 36 000 ounces foregone and 101 000 ounces deferred).
Group processing capacity was limited by the scheduled rebuild of the Number 5 furnace in the period at Impala Rustenburg. Maintenance was initiated in December 2023 with the furnace successfully recommissioned as planned in April 2024. All three furnaces at Impala Rustenburg were successfully rebuilt between FY2022 and FY2024, with excess concentrates and matte stockpiled for future refining and sale. Implats ended the period with excess inventory of approximately 390 000 6E ounces (FY2023: 245 000 6E ounces). Group processing capacity will benefit from higher annual available capacity at Impala Rustenburg and will be bolstered by the commissioning of the new furnace at Zimplats in H1 FY2025. This will facilitate the steady release of excess inventory over the FY2025, FY2026 and FY2027 reporting periods.
Mining inflation, the maiden annual consolidation of Impala Bafokeng costs and the translation of the dollar cost base of Zimplats and Impala Canada offset the benefit of volume gains and cost containment measures delivered at managed operations. Group stock-adjusted unit costs increased by 5% to R20 922 per 6E ounce (FY2023: R19 834 per 6E ounce) and were 3% higher on a like-for-like basis (excluding Impala Bafokeng and the discretionary employee bonus paid in FY2023).
Capital expenditure at managed operations rose by 22% to R14.0 billion (FY2023: R11.5 billion) as annual spend at Impala Bafokeng was consolidated in the period and expenditure on growth projects at Zimplats accelerated, offsetting reduced capital expenditure at Impala Rustenburg, Impala Canada and Marula.
Impala
Impala reaped the benefit of specific internal interventions, previous investment in asset integrity and operational flexibility and fewer external interruptions, to deliver a strong operational result. Notwithstanding the 11 Shaft tragedy, achieved production in the period reached a three-year high.
Total development declined by 11%, in line with planned development rates, while mineable face length declined by 2% to 25.8km due to reductions at the short-life shafts (1, 6 and EF). Structural changes and process enhancements were implemented to support targeted mining flexibility of 1.6 panels per stoping team and mineable face length of circa 25km.
Tonnes milled were stable at 10.20 million tonnes (FY2023: 10.25 million tonnes) with strong mining momentum at 12, 14, 16 and 20 shafts offsetting the production impact of safety stoppages at 6, 10 and 11 shafts. Tonnes milled per employee costed increased by 2%. Several interventions, focused on grade control and mining flexibility, yielded improvements, and milled grade also benefited from a reduction in development volumes and increased by 3% to 3.99g/t (FY2023: 3.88g/t). Reduced load curtailment led to an increase in tailings volumes treated as well as plant stability and improved processing yields, and stock-adjusted 6E production was 4% higher at 1.28 million ounces (FY2023: 1.23 million ounces). Production losses associated with the 11 Shaft accident are estimated at circa 50 000 6E ounces. Refined 6E volumes increased by 1% to 1.21 million ounces (FY2023: 1.21 million ounces), with processing capacity constrained during the scheduled rebuild of the Number 5 furnace.
Total cash costs, including corporate and marketing costs, increased by 5% to R27.9 billion (FY2023: R26.7 billion). Costs in the prior comparable period were elevated by the R442 million discretionary employee bonus payment. In the period under review, cost-containment measures mitigated estimated mining inflation of 6.5%. Stock-adjusted unit costs benefited from volume gains and were stable at R21 772 per 6E ounce (FY2023: R21 685 per 6E ounce).
Capital expenditure decreased by 23% to R3.1 billion (FY2023: R4.1 billion). Stay-in-business spend declined by 22% as several mining and processing projects neared completion and cash-preservation measures were implemented. Replacement capital declined by 80% to R68 million on the completion of the decline project at 12 Shaft, and expansion capital increased by 60% to R255 million as the debottlenecking project at the base metal refinery was progressed. In total, R1.1 billion (FY2023: R1.2 billion) was invested in the Rustenburg smelters and the Springs refineries during the period.
6E sales volumes increased by 4% to 1.26 million 6E ounces (FY2023: 1.20 million 6E ounces), aided by some destocking of refined inventory of palladium and minor PGM, but the achieved rand revenue per 6E ounce sold declined by 31% to R24 542 (FY2023: R35 768). Free cash flow was impeded by lower revenue and declined by 79% to R1.5 billion, while EBITDA retraced 74% to R3.5 billion. Headline earnings were impacted by the R1.1 billion non-cash IFRS 2 B-BBEE charge and R197 million in restructuring costs incurred in the period, resulting in a headline loss of R611 million (FY2023: R8.0 billion profit).
Stock-adjusted production at Impala Rustenburg is expected to be between 1.25 and 1.30 million 6E ounces in FY2025. Refined production and sales volumes for the year will benefit from the expected reduction in excess inventory, with no major processing maintenance scheduled in the period.
Impala Refining Services (IRS)
Receipts of 6E matte and concentrates from managed operations at Zimplats and Marula increased by 4% to 869 900 ounces (FY2023: 838 500 ounces) as higher production at Zimplats offset lower deliveries from Marula. 6E receipts from JVs, Two Rivers and Mimosa, increased by 2% to 545 000 6E ounces (FY2023: 531 900 6E ounces). Third-party 6E receipts decreased by 34% to 190 800 ounces (FY2023: 287 300 ounces) due to the conclusion of two contracts in the prior comparable period. In aggregate, gross 6E receipts were 3% lower at 1.61 million ounces (FY2023: 1.66 million ounces).
Despite the Number 5 furnace rebuild in the period, refined 6E volumes increased by 3% to 1.49 million ounces (FY2023: 1.45 million ounces) as available processing capacity benefited from the reduced severity and intensity of load curtailment.
The cash operating costs associated with smelting, refining and marketing IRS production rose by 3% to R2.2 billion (FY2023: R2.1 billion), with rising electricity costs partially offset by slowing inflation on consumables. Weaker rand PGM pricing and lower purchased volumes resulted in the cost of metals purchased declining by 32% to R32.0 billion (FY2023: R47.2 billion) and offset the valuation impact of higher in-process inventory. Profitability in the prior comparable period was negatively impacted by the net realisable value adjustments required by the fall in rhodium pricing. In FY2024, gross profit and EBITDA rebounded to R4.9 billion and R5.2 billion, respectively. Free cash flow generation was impacted by higher in-process inventory and declined to R99 million (FY2023: R1.3 billion) and IRS contributed R3.8 billion to Group headline earnings (FY2023: loss of R362 million).
Receipts of third-party 6E in concentrate are expected to be between 150 000 ounces and 170 000 ounces in FY2025, while refined output and sales at IRS are set to benefit from improved available Group processing capacity.
Impala Bafokeng
The period under review marks the first full year Implats has controlled and fully owned the RBPlat assets, now known as Impala Bafokeng. Performance during the period lagged expectations, with operating momentum at Styldrift negatively impacted by limited mining flexibility, poor fleet availability and a lengthy safety stoppage following a fatal accident in H1 FY2024. BRPM performed well but production was impeded by sporadic illegal industrial action.
The interventions implemented to improve plant availabilities and lift recoveries at the concentrators yielded notable gains during the year, negating the need for toll milling. Studies for future tailing retreatment and chromite recovery projects were initiated. Capital expenditure planning was reviewed and adjusted. The conclusion of the S189 process, announced in May 2024 in response to a weaker PGM pricing environment, will result in the appropriate labour complement for near-term production parameters. Ongoing initiatives to strengthen leadership capability and management routines and embed Implats’ policies and systems were progressed.
At Styldrift, production parameters were reset to match current performance, providing time to establish the operational readiness needed to deliver improved efficiencies and increase production to steady-state levels. Monthly milled throughput of 230 000 tonnes is now targeted for the end of FY2027.
Impala Bafokeng processed 4.24 million tonnes at a milled grade of 4.36 g/t yielding 482 600 6E ounces in concentrate – of which, 294 400 6E ounces were from BRPM and 188 200 6E ounces from Styldrift.
Cash costs of R9.8 billion were incurred, with unit costs of R20 406 per 6E ounce in concentrate (BRPM R16 481 per ounce and Styldrift R26 709 per ounce). Capital expenditure was R1.4 billion with capital reprioritised to sustain current production levels.
Impala Bafokeng reported a gross loss of R994 million. Its negative EBITDA of R1.4 billion was impacted by several once-off charges and costs associated with concluding the RBPlat acquisition, the S189 process and the IFRS 2 B-BBEE charge. A headline loss of R1.9 billion was reported. Free cash outflow was R3.1 billion, impacted by weak PGM pricing, once-off expenditure incurred in the period and the delayed receipt of concentrate payments at year-end, which resulted in elevated working capital.
Impala Bafokeng is expected to produce between 490 000 and 530 000 6E ounces in concentrate in FY2025.
Zimplats
Zimplats delivered another strong performance, benefiting from higher installed milling capacity and cost-containment initiatives implemented in the period. Project activity and hence capital expenditure remained elevated, with significant progress achieved on the mine replacement projects, the construction of a new furnace and Phase 1 of the solar photovoltaic plant.
Tonnes mined increased by 5% to 7.9 million tonnes (FY2023: 7.6 million tonnes), benefiting from pillar reclamation at Rukodzi Mine and the continued production ramp-up at Mupani Mine, while tonnes milled rose 5% to 7.9 million tonnes (FY2023: 7.5 million tonnes) with the third concentrator plant in operation for the full period. Milled grade was stable at 3.32g/t (FY2023: 3.33g/t) and 6E in matte production increased by 6% to 645 900 6E ounces (FY2023: 611 200 6E ounces).
Total cash costs increased by 6% to US$532 million (FY2023: US$503 million) on higher production volumes and mining inflation of 4.1%, driven primarily by utilities escalation. Translated costs were impacted by rand depreciation and increased by 11% to R9.9 billion (FY2023: R8.9 billion). Unit costs per tonne milled were maintained at US$67 per tonne, while stock-adjusted costs, including stockpile movements, improved by 1% to US$829 per 6E ounce (FY2023: US$836 per 6E ounce).
Capital expenditure increased by 42% to US$440 million (FY2023: US$310 million) and, at R8.2 billion, was 49% higher in rand terms (FY2023: R5.5 billion). Stay-in-business spend increased by 39% to R3.0 billion (FY2023: R2.1 billion) as the solar project was progressed, while replacement capital retraced by 7% to R1.5 billion (FY2023: R1.6 billion) due to the project at Bimha Mine completing in June 2024. The smelter expansion resulted in expansion capital rising 116% to R3.7 billion.
The significant retracement in rhodium, palladium and nickel pricing resulted in a 29% decline in sales revenue to R23 188 per 6E ounce sold, which offset the 6% increase in sales volumes to 641 300 6E ounces. Gross profit fell 76% to R1.5 billion, while EBITDA was 63% lower at R3.0 billion. Headline earnings attributable to the Group were impacted by higher foreign exchange losses but benefited from tax credits and fell 60% to R2.0 billion. Zimplats recorded a free cash outflow of R2.4 billion, with elevated capital expenditure exacerbating the pressure of lower metal pricing in the period.
Zimplats is operating at steady-state and is expected to produce between 630 000 and 660 000 6E ounces in FY2025. Commissioning of both the expanded smelter and the solar plant is planned for H1 FY2025.
Marula
Production at Marula was negatively impacted by lengthy safety stoppages and subsequent audits following a fatal accident in August 2023, as well as constrained mining flexibility due to geological features and a brief period of industrial action relating to employee share ownership trust (ESOT) payments. Operating momentum was stabilised with programmes implemented to strengthen leadership and management routines, and the labour restructuring concluded in July 2024.
Tonnes milled fell by 4% to 1.85 million tonnes (FY2023: 1.94 million tonnes) reflecting the operational challenges, and grade declined by 3% to 4.28g/t on the higher proportion of development tonnage processed, resulting in a 7% decline in 6E concentrate volumes to 223 300 ounces (FY2023: 241 000 ounces).
The provision for community expenses, addition of novice labour, higher SLP spend and trackless machinery operating costs compounded the impact of mining inflation, and cash costs increased by 11% to R4.4 billion (FY2023: R3.9 billion). Lower ounce production resulted in a 20% increase in unit costs to R19 530 per 6E ounce (FY2023: R16 303 per 6E ounce). Capital expenditure reduced to R497 million (FY2023: R558 million) as the execution of the Phase 2 life-of-mine extension project was delayed and spend on trackless machinery was deferred.
Lower production and elevated costs compounded the impact of weaker rand PGM pricing and Marula reported a gross loss of R532 million, and negative EBITDA of R100 million. Headline earnings attributable to Group reduced to R203 million (FY2023: R2.3 billion) and a free cash outflow of R161 million was recorded.
Marula is expected to produce between 230 000 and 250 000 6E ounces in concentrate in FY2025.
Impala Canada
Impala Canada was repositioned and restructured due to the deterioration in palladium pricing, sustained inflationary pressures and the constrained operating environment. Production is now focused on high-grade underground mining blocks and cost, and capital expenditure was rebased to lower the operation’s all-in sustaining cost. Spend on greenfield TSF capacity was halted and the Lac des Iles life-of-mine was revised to between three and four years at a reduced production rate.
Tonnes mined decreased by 27% to 3.30 million tonnes (FY2023: 4.54 million tonnes), in line with the rebased production profile, which incorporates updated cut-off grades and removes lower margin material. Milled throughput declined by 3% to 3.68 million tonnes (FY2023: 3.80 million tonnes) as milled volumes were supplemented with surface stockpiles. Milled grade declined by 1% to 2.90g/t (FY2023: 2.93g/t) due to treatment of ore stockpiles and 6E production in concentrate decreased by 4% to 280 600 ounces (FY2023: 290 900 ounces).
Inflationary pressures eased on utilities, while absolute savings were achieved on labour restructuring and lower mined volumes in the period. Cash costs declined by 14% to C$306 million (FY2023: C$358 million) and were 11% lower in rand at R4.2 billion (FY2023: R4.7 billion). Stock-adjusted unit costs per 6E ounce in concentrate improved by 6% and 2% to C$1 129 (FY2023: C$1 195) and R15 592 (FY2023: R15 854), respectively.
Capital expenditure declined by 41% to C$54 million (FY2023: C$92 million) as spend on the greenfield TSF was stopped and expenditure on capital development and mobile equipment was curtailed in line with the shortened life-of-mine production profile.
The 37% fall in received palladium pricing offset the benefit of lower costs and the weaker achieved rand in the period. Impala Canada reported a gross loss of R94 million (FY2023: profit of R587 million), a headline loss of R308 million (FY2023: profit of R94 million), and with a free cash inflow of R96 million. Basic earnings were further impacted by R1.6 billion in impairments recorded during the year.
Impala Canada is expected to produce between 250 000 and 270 000 6E ounces in concentrate in FY2025.
Two Rivers
Two Rivers continued to face a constrained environment on the UG2 footprint – development rates were accelerated to increase mined volumes and mining activities navigated poor geological conditions. The Merensky project was progressed in the period, but the decision was taken to place the project on care and maintenance in FY2025, following initial commissioning, to mitigate potential free cash outflows associated with a ramp-up during the prevailing price environment.
Tonnes milled were stable at 3.57 million tonnes (FY2023: 3.56 million tonnes) as lower mined UG2 volumes were supplemented by batch-milling Merensky feed. Grade of 3.12g/t (FY2023: 3.09g/t) was impacted by the treatment of the lower grade Merensky stockpiles, which also lowered processing yields. 6E concentrate production declined by 1% to 291 400 ounces (FY2023: 295 400 ounces).
Total cash costs increased by 16% to R4.7 billion (FY2023: R4.0 billion), with mining inflation exacerbated by higher trackless maintenance costs and rental of a mobile crusher to enable the milling of Merensky ore. Stock-adjusted unit costs per 6E ounce (which include the cost of the Merensky stockpile milled) increased by 18% to R16 513 per ounce (FY2023: R13 974 per ounce).
Capital expenditure increased by 33% to R4.0 billion (FY2023: R3.0 billion) with R3.1 billion incurred on the Merensky project.
Gross profit for the year reduced by 82% to R538 million (FY2023: R3.0 billion) on the back of lower sales revenue and higher cash costs. Two Rivers reported an attributable net loss of R407 million (FY2023: profit of R1.5 billion) after accounting for an impairment of R987 million (post tax) and contributed R580 million to Group headline earnings.
Two Rivers is expected to produce between 270 000 and 300 000 6E ounces in concentrate in FY2025 as activities to deepen the UG2 mine and restore operational flexibility are prioritised.
Mimosa
Mimosa operated well, delivering volume gains and strong cost containment, which mitigated persistent local mining inflation and increased power instability in Zimbabwe.
Tonnes milled increased by 6% to 2.89 million tonnes (FY2023: 2.74 million tonnes) as the optimised plant was stress-tested to evaluate the optimal balance between concentrator recoveries and milling rates. Higher volumes and improved plant stability offset lower milled grade, which declined by 4% to 3.61g/t on dilution caused by poor ground conditions. 6E production in-concentrate increased by 4% to 255 400 ounces (FY2023: 245 100 ounces) as improved concentrator recoveries from the plant optimisation project partially offset the lower grades.
Costs were negatively impacted by spend incurred on labour rationalisation in the period, elevated utility costs and local inflation, increasing by 5% and 11% to US$265 million and R5.0 billion, respectively. Unit costs benefited from volume gains and increased by 1% and 6% to US$1 039 and R19 444 per 6E ounce, respectively (FY2023: US$1 030 and R18 290).
Capital expenditure decreased by 26% to US$90 million (FY2023: US$122 million) as the plant optimisation project concluded and the new TSF project was advanced. A decision was taken not to progress the North Hill operation in the current pricing environment, which will impact on life-of-mine at Mimosa. Efforts are focused on the current operations to improve efficiencies and options are evaluated to extend its life-of-mine.
Lower rhodium, palladium and nickel prices resulted in significant margin compression and a gross loss of R604 million (FY2023: R2.0 billion profit) was recorded in the period. An attributable post-tax impairment of R686 million resulted in an attributable loss of R861 million (FY2023: R887 million profit). Implats received R91 million in dividends from Mimosa in the period.
Mimosa is expected to produce between 240 000 and 260 000 6E ounces in concentrate in FY2025.
MINERAL RESOURCES AND MINERAL RESERVES
The Group’s attributable Mineral Resource estimate increased by 21% to 316.5 million 6E ounces, due to the inclusion of Impala Bafokeng. This increase was marginally offset by production depletion and the decrease in Implats’ shareholding in Impala from 96% to 87%, following the conclusion of the B-BBEE transaction.
Group attributable Mineral Reserves increased by 4% to 54.6 million 6E ounces, due to the inclusion of Impala Bafokeng. The increase was offset by production depletion, the decrease in Implats’ shareholding in Impala from 96% to 87%, and the exclusion of the Mimosa North Hill and the Two Rivers Merensky projects, which are not progressing due to the unfavourable metal price environment.
The maiden inclusion of Impala Bafokeng’s Mineral Resources and Mineral Reserves at 31 December 2023 was calculated at 100% shareholding and has subsequently been offset by mining depletion and the decrease in Implats’ shareholding to 87% on conclusion of the B-BBEE transaction.
FINANCIAL REVIEW
The benefit of strong operational delivery in FY2024 was offset by significantly weaker US dollar sales revenue. Sharply lower average palladium and rhodium pricing negated higher sales volumes and the benefit of a weaker average rand. Reported financial metrics were also negatively impacted by several once-off cash and non-cash items in the period.
Revenue of R86.4 billion was 19% or R20.2 billion lower than the prior comparable period:
Cost of sales declined by 4% or R3.3 billion to R80.9 billion:
Stock-adjusted unit costs increased by 5% or R1 088 per 6E ounce to R20 922:
Normalised unit costs, excluding the consolidation of Impala Bafokeng and the impact of the prior year’s discretionary bonus, increased by 3% to R20 041 per 6E ounce.
The Group generated gross profit of R5.5 billion (FY2023: R22.3 billion) at a gross profit margin of 6% (FY2023: 21%).
Implats accounted for several significant once-off, non-cash items in profit before tax in FY2024:
Income was impacted by foreign exchange losses of R924 million (FY2023: R857 million gain) with a period-end exchange rate of R18.19/US$ (FY2023: R18.85/US$). Other expenses include the R1.9 billion non-cash IFRS 2 charge, R418 million transaction-related costs associated with concluding the RBPlat acquisition, and R488 million incurred on the labour restructuring processes at Impala Canada, Zimplats, the South African managed operations and the corporate office in the period. The impact of lower PGM pricing on earnings at both JVs, Mimosa and Two Rivers, was compounded by combined post-tax impairments of R1.7 billion, resulting in a loss from associates of R1.2 billion (FY2023: profit of R3.4 billion and benefit of RBPlat equity earnings).
Implats recorded EBITDA of R12.4 billion (FY2023: R36.0 billion) at an EBITDA margin of 14% (FY2023: 34%) negatively impacted by the non-cash IFRS 2 charge and once-off cash expenses associated with the RBPlat acquisition and labour restructuring.
The tax credit for the period amounted to R3.3 billion, resulting in an effective tax rate of 16% (FY2023: R3.6 billion charge and 37%). The tax rate was impacted by adjustments for non-deductible expenditure related to impairments and the IFRS 2 B-BBEE charge, and the post-tax accounting of the losses from associates, while benefiting from a deferred tax credit relating to a reversal of withholding tax on undistributed profits at Zimplats.
Headline earnings of R2.4 billion or 269 cents per share were 87% and 88% lower, respectively, and reflect the 215 cents per share impact of the IFRS 2 B-BBEE charge (FY2023: R18.8 billion and 2 211 cents per share). Basic earnings declined to a loss of R17.3 billion or 1 929 cents per share, from basic earnings of R4.9 billion and 577 cents per share in the prior year. The cumulative impact of impairments in FY2024 resulted in a post-tax charge of R19.8 billion or 2 204 cents per share.
The weighted average number of shares in issue increased to 897.36 million from 850.28 million in the comparative period. The number of shares in issue increased to 904.37 million at period-end from 866.40 million at 30 June 2023, after 37.97 million Implats shares were issued as part of the acquisition consideration for RBPlat.
Cash flows from operating activities declined by 71% to R8.7 billion from R30.4 billion. The impact of materially lower received rand PGM pricing was compounded by the working capital impact of higher in-process inventory, a timing delay in the R1.0 billion receipt for sale of concentrates at Impala Bafokeng which was received in early July 2024, and R0.9 billion incurred on once-off RBPlat transaction costs. Net cash inflows from operating activities of R6.9 billion declined from R23.6 billion in the prior comparable period.
Capital cash outflows decreased by 3% to R12.3 billion (FY2023: R12.7 billion). A further R1.7 billion of capital payments, primarily associated with the Zimplats growth projects and incurred in the prior period, was transferred from prepayments to capital expenditure in the FY2024 period. As a result, the Group’s total capital expenditure increased to R14.0 billion, reflecting the consolidation of capital expenditure from Impala Bafokeng (R1.4 billion), higher levels of growth capital at Zimplats and the impact of rand depreciation on the translation of foreign subsidiaries’ spend. Stay-in-business spend increased by 10% to R8.1 billion, while replacement spend of R1.8 billion declined by 19% and expansion capital of R4.1 billion increased by 114%. The Group recorded a free cash outflow of R4.0 billion (FY2023: inflow of R14.2 billion).
The cash consideration associated with acquiring the remaining shareholding in RBPlat resulted in a R11.4 billion outflow (FY2023: R4.9 billion) during the period. Implats received R249 million (FY2023: R1.6 billion) in dividends from JVs and associates, while dividend payments totalling R1.8 billion (FY2023: R13.6 billion) were made to shareholders (R1.5 billion) and non-controlling interests at Zimplats and Impala Chrome (R304 million).
Zimplats utilised its revolving borrowing base facility of US$60 million (R1.1 billion) to fund its elevated capital expenditure during the period, with closing Group cash balances of R9.6 billion (FY2023: R26.8 billion).
The consolidation of Impala Bafokeng’s PIC housing facility (R1.4 billion) and deferred revenue associated with its gold streaming facility (R1.5 billion) resulted in gross debt of R4.0 billion, excluding R0.9 billion in finance leases (FY2023: gross debt of R2.9 billion). Due to limited recourse to Implats, the PIC housing facility has been excluded from debt calculations for the purpose of covenants, resulting in closing adjusted debt of R2.6 billion and closing adjusted net cash of R6.9 billion (FY2023: R25.0 billion).
At the end of the period, the Group had an undrawn, dual-tranche revolving credit facility (RCF) of R6.5 billion and US$93.8 million, with accordion options in place of R2.2 billion and US$37.5 million, respectively, resulting in liquidity headroom of R17.7 billion. Subsequent to year-end, the Impala Bafokeng RCF of R2.0 billion was cancelled and the accordion option in the Implats RCF increased by R2.0 billion to R4.2 billion.
Implats’ capital allocation framework aims to sustain and grow meaningful value for all stakeholders and provide attractive returns to shareholders while maintaining financial flexibility for the Group.
During the period Implats incurred R9.9 billion on stay-in-business and replacement capital, with a further R0.4 billion spent on acquiring shares for the Implats share incentive schemes. After adjusting for foreign exchange translation losses, the Group realised an adjusted free cash outflow of R0.5 billion (FY2023: inflow of R16.6 billion), pre-growth capital.
No dividend was declared, in line with the Group’s dividend policy, which is premised on returning a minimum of 30% of adjusted free cash flow, pre-growth capital. In FY2024, R15.6 billion in cash was allocated to growth and investment by funding the R11.4 billion cash consideration for the remaining RBPlat equity, investment of R4.1 billion in strategic expansion projects at the Group’s mining and processing operations and contributing to AP Ventures. Free cash flow allocated to shareholder returns, through dividends to Zimplats and Impala Chrome minorities, accounted for R0.3 billion. Due to negative free cash generation during the period, prior period cash reserves of R16.4 billion were used to support the remaining cash component of the RBPlat mandatory offer and fund the once-off RBPlat acquisition costs, and the Group’s operational and capital requirements.
PGM MARKET OUTLOOK (calendar years unless otherwise stated)
The global macro-economy has continued to deliver steady growth in 2024, seemingly navigating a complex geopolitical environment at a low and slow rate of output. This performance has largely surprised to the upside, despite fiscal fragilities, slowing disinflation and still-restrictive global interest rates and the International Monetary Fund forecasts an economic expansion of 3.2% and 3.3% in 2024 and 2025, respectively.
Lacklustre primary production and softer-than-expected secondary supply resulted in tighter-than-expected PGM markets in 2023, despite disappointing pricing over the period. Deficits in platinum, palladium and rhodium markets are estimated at 811 000, 1.32 million and 131 000 ounces, respectively. Pent-up demand and fading supply chain constraints supported significantly improved global light-vehicle production, which bolstered automotive offtake and offset lacklustre industrial demand for palladium and rhodium and softening investment demand for platinum.
Despite headline market deficits, significant pricing dislocations were caused by industrial and automotive end-users who destocked portions of their PGM inventory, as well as metal discounting as trade flows shifted from West to East. Negative precious metal investor sentiment and burgeoning speculative positioning amplified these factors.
All three major PGM markets are likely to remain in fundamental deficits in 2024, although market shortfalls are expected to ease from those witnessed in 2023 – automotive production growth is expected to moderate, industrial demand is expected to be marginally lower as capacity expansions ease, and supply is expected to stage a modest recovery on improved auto catalyst scrap collections. However, the pricing impact of continued industrial and automotive original equipment manufacturer (OEM) destocking will continue to heavily influence physical market tightness over the remainder of the calendar year, as will the trajectory of monetary policy and interest rates in major developed economies.
Pricing
The 'pre-investment' surplus characteristic of the platinum market’s recent history has dissipated as automotive growth from switching, tightening heavy duty diesel demand and resilient offtake from the industrial sector met with softer-than-expected primary and secondary supply. Investor interest remains anaemic, however, with softening trade on the SGE and a widening discount to gold. The platinum price remains rangebound between US$900 and US$1 000 per ounce, despite the recent strengthening of the rand on an improving domestic outlook following South African national elections in May 2024.
Palladium pricing continues to be negatively impacted by a confluence of factors, including the sustained flow of discounted Russian primary supply, destocking by automotive OEMs adjusting their inventory levels and rising open interest, and growing net short positioning on NYMEX. The demand growth outlook for palladium remains supportive on expectations for a medium-term recovery in automotive production, and as the narrative about EV penetration rates slowing at the expense of hybrid vehicles gains traction. Despite news of lower Russian refined production in 2024 and weaker recycling flows, investor positioning remains overwhelmingly bearish, weighing heavily on pricing.
Rhodium’s modest gains over the financial year reflected improving physical market conditions. The metal is significantly exposed to South African supply and the pace of electrification. Likely revisions to both these metrics will continue to result in tight markets and price support in the medium term.
Automotive
The global light vehicle (LV) market delivered significant volume improvements in 2023 versus 2022, boosted by pent-up demand and fading supply constraints as semiconductor shortages eased, with all key regions posting annual gains. In 2024, markets previously impeded by a lack of vehicle availability will now reflect underlying demand drivers, with inventory levels approaching normalised levels and consumer requirements dictating LV sales volumes, which are expected to increase by 3% and 4% in 2024 and 2025, respectively.
LV production increased by 10% in 2023 and is expected to rise by 1% in 2024 and 3% in 2025 as backlogs and inventories normalise, exposing production to cooler underlying LV demand due to the tight economic conditions and affordability issues weighing on consumers. LV sales of 42.4 million units in H1 2024 rose by 3% from the prior comparable period.
An emerging theme in the final months of 2023 was the slowing sales growth in battery electric vehicles (BEVs) and this gained momentum in the first half of 2024 – with growth in aggregate electrified vehicles currently outstripping that of BEVs, as various types of hybrid electric vehicles gained notable sales traction.
Current forecasts assume BEVs will realise further market share gains at the expense of internal combustion engine vehicles in 2024 and beyond. However, near-term market outlooks are now being trimmed in both North America and Europe where mass-market adoption of BEVs faces challenges from a combination of lower or withdrawn government subsidies, high pricing, falling resale values and a lack of charging infrastructure.
Global medium and heavy truck sales are expected to slow in 2024 after a strong performance in 2023 and a weaker outlook in mature markets, including Europe and North America. Global Data expects growth of 3% in 2024 and 5% in 2025 after the 16% volume gain delivered in 2023. Production, which increased by 13% in 2023, is expected to grow 2% in 2024 before accelerating marginally to 5% in 2025.
Having surprised positively in 2023, PGM automotive demand is set to ease in 2024, with limited forecast LV production growth still skewed to BEVs, and on continued efforts to thrift loadings between emission stages in both the LV and heavy-duty markets. Platinum demand will outperform both palladium and rhodium, supported by higher switching and growth in the heavy duty market.
Industrial
Industrial demand for PGMs is driven by the chemical, glass, electrical, biomedical and petroleum sectors and is impacted by capacity utilisation rates and changes in installed capacity. China’s goal of self-sufficiency has driven structural growth in industrial PGMs in the recent past, with heavy investment into expanding domestic capacity in chemical, glass and petroleum refining.
Platinum industrial demand was stable in 2023, benefiting from resilient glass and chemical demand, which offset softer offtake elsewhere. Industrial demand for palladium continues to exhibit greater price elasticity than for platinum or rhodium, with easing chemical offtake during the year compounded by weaker electronics demand. Rhodium industrial demand was negatively impacted by weak glass demand in 2022 and 2023, as alloys were adjusted to contain higher platinum content in response to record rhodium pricing.
Industrial demand for PGMs is expected to ease but remain elevated in 2024, supported by robust chemical demand and a modest recovery in electronics demand from both electronic devices and renewed investment in data storage following the post-Covid-19 slowdown. These underlying growth drivers will help compensate for a slowing cycle of capacity expansions in key demand sectors, including chemicals, glass, and petrochemicals, which supported industrial PGM demand at record levels over the recent past.
Jewellery
Platinum jewellery demand decreased in 2023 as the Chinese jewellery market contracted due to soft consumer sentiment on a slowing domestic economy, competition from gold, and a run-down in retail and manufacturer stocks, which offset better-than-expected demand in other regions.
The post-Covid-19 recovery in jewellery demand is now largely complete and after a notable contraction in the recent past, a modest improvement in Chinese demand is expected in 2024, albeit off a base of circa 50% of pre-pandemic levels. Western demand is likely to edge higher – platinum’s sustained price discount to gold, expectations for a 'soft landing' in the US and modest restocking will support offtake in North America. European demand will benefit from a resilient luxury sector and further growth in the bridal market, away from white gold. India is set to deliver double-digit growth in the medium term, with manufacturing volumes benefiting from store expansions into tier two and tier three cities and strong exports. Japanese demand will also benefit from the pricing differential to gold supporting bridal offtake.
The platinum jewellery sector has rebalanced – from a Chinese-dominated demand segment to a more regionally diverse and less price elastic one – and demand is now more closely linked to underlying consumer and demographic trends. Implats’ modelling indicates this provides resilient and meaningful stability to the demand outlook for platinum jewellery.
Investment
Implats’ definition of the investment market includes exchange trades fund (ETF) flows and net bar and coin purchases. In 2023, modest purchasing by platinum ETFs and positive Japanese bar buying offset weakness in bar and coin purchases elsewhere, resulting in total net platinum investment of circa 177 000 ounces. Palladium and rhodium investment markets are far more modest in size and the Group estimates net ETF purchases of 58 000 ounces of palladium and negligible sales of less than 1 000 ounces of rhodium in 2023.
As of 30 June 2024, the 13 platinum, palladium and rhodium ETFs in Europe, Asia, North America, Australia, Japan and South Africa held a total of 3.39 million ounces platinum and 656 500 ounces palladium, with 2024 calendar year-to-date inflows of 444 100 ounces and 142 000 ounces, respectively. Rhodium ETF activity was negligible, with holdings of 9 300 ounces some 100 ounces lower in 2024.
The rising yen platinum price has resulted in net bar returns by Japanese investors, resulting in modest net disinvestment in the year to date. Bar and coin demand in the West will be challenged by lower Eagle coin production by the US Mint, while Chinese demand is set to benefit from the increased availability and promotion of investment products.
PGMs in the energy transition
As the world seeks to decarbonise, the unique chemical properties of PGMs have resulted in a plethora of potential emerging and expanded future demand segments. These include the synthesis of biofuels and synthetic fuels, and in electrochemical applications for platinum, iridium, and ruthenium.
The development of a hydrogen economy and the latent potential offtake for PGMs is a key underpin to our long-term view of future demand and the role our primary products will play in a changing world. The more recent pace of advancement has been slower than previously anticipated, despite many major economies including the US, China, Japan, the UK, the EU, Australia, Canada and India all having hydrogen programmes and associated subsidies in place.
Medium-term hydrogen-derived PGM growth is expected to remain rapid, but some high-end forecasts have been trimmed amid project delays, uncertain policy and the weak macro-economic environment. In a period where top-line demand numbers have been revised, news flow from OEMs on fuel-cell electric vehicle (FCEV) plans and launches has increased – and this should continue providing upside to currently conservative market commentator estimates of likely penetration rates of this key zero-emission technology.
Industry alignment, collaboration and advocacy are essential to supporting the future demand potential for PGMs.
Supplies
Refined PGM mine supply disappointed in 2023, due to operational constraints across most key producing geographies, limited destocking of excess in-process inventory and a series of negative revisions announced to medium-term production profiles across the PGM peer group. Russian production, however, was delivered in excess of previous guidance, with sales volumes further elevated by destocking of refined inventory. Scheduled furnace maintenance at Nornickel in 2023 was delayed and 2024 production was guided to retrace as a result, with constrained processing capacity unlikely to allow for in-process inventory to accumulate.
The persistence of prevailing PGM pricing placed considerable pressure on South African and North American producer economics. Planned capital expenditure was scaled back significantly, with several mine closures and project deferrals announced, and primary supply is now set to decline in the medium term.
Secondary PGM supply contracted again in 2023 as auto sales remained weak and scrappage rates reduced. In addition, the cost and complexity of collecting, funding, and transporting spent catalyst material remains high. Some recovery in secondary supply is expected in the medium term. However, the pattern and scale of a recovery in western world collections remains a key forecast risk to near-term market balances and tightness in the major PGMs.
OUTLOOK AND GUIDANCE
The outlook for growth and inflation continues to face risks with implications for the timing and pace of rate cuts, which are seen as integral to the expected recovery in precious metal investor sentiment, demand and pricing. Political and geopolitical risks and the potential impact for trade, industrial policy, fiscal dynamics and productivity are likely to prevail for much of FY2025 – resulting in continued uncertainty and investor caution.
Implats remains focused on delivering safe and profitable production – operational planning and capital investment is structured to enhance the competitive positioning of each asset to maximise returns and limit the use of the balance sheet to cross-subsidise loss-making operations.
Following the significant setback in fatalities in FY2024, the focus on improving the Group’s safety performance and eliminating fatal injuries remains steadfast, reinvigorated by targeted initiatives to enhance our safety culture, individual compliance and visible-felt leadership.
Key mining and processing assets operated well in FY2024, however some failed to deliver to expectations and a series of interventions are underway at each of Marula, Two Rivers and Styldrift to ensure these operations revert to plan and realise their inherent potential during FY2025.
PGM miners continue to face challenging – and sometimes competing – stakeholder expectations from host communities, governments, organised labour and investors. Given persistent socioeconomic challenges and financial constraints across our operating geographies, Implats will continue to prioritise labour stability, and constructive engagement with its mine communities, regulators and other key stakeholders.
Guidance
Group production in FY2025 will be supported by sustained operating momentum at each of Impala Rustenburg, Zimplats and Mimosa. Performance at Two Rivers is expected to stabilise as the Merensky project is placed on care and maintenance and UG2 production is prioritised. At Impala Bafokeng, production at Styldrift will be consolidated at a lower labour complement, while third-party receipts reflect expected volumes from pre-existing contracts. Refined volumes will benefit from the partial release of previously accumulated excess inventory, with Group sales in line with refined and saleable production.
Group 6E refined and saleable production is expected to be between 3.45 and 3.65 million ounces. Group unit costs are forecast to rise by up to 5% to between R21 000 and R22 000 per 6E ounce on a stock-adjusted basis. Group capital expenditure is forecast to be between R8 billion and R9 billion, inclusive of growth capital of between R0.9 billion and R1.1 billion. This guidance assumes exchange rates of R18.25/US$ and C$1.33/US$, respectively.
FY2024
FY2025
1 Includes Impala Canada and Impala Bafokeng saleable ounces.
The financial information on which the above guidance is based has not been reviewed and reported on by Implats' external auditors.