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Southern Africa

Impala Refining Services (IRS)

Impala Refining Services

Impala Refining Services (IRS) was created in July 1998 as a dedicated vehicle to house the toll refining and metal concentrate purchases built up by Implats.  This concept has since become a major strategic thrust for the group.  IRS enables Implats to leverage both its surface assets and expertise to reduce costs through economies of scale, and to pursue growth through strategic alliances and joint ventures.  During FY2012, IRS reported attributable platinum production of 697,500 ounces (1.53 million ounces of PGMs).

The IRS model

The IRS model enables Implats to reduce its exposure to mining risk while growing production with minimum investment requirements by using Impala’s excess smelting and refining capacity.  At the same time this business also enables junior operators to exploit smaller PGM deposits.

 

Business summary

Main areas of activity

  • Provides smelting and refining services through offtake agreements with Group companies (except Impala) and third parties
  • ecycling and toll-treatment
 

Operational review 2013

Impala Refining Services    
View latest Annual Report information    
 

Typical IRS products include:

  • flotation concentrates from Marula, Mimosa, Two Rivers, Eastern Platinum’s Crocodile River mine, and other small mining contracts;
  • furnace matte from Zimplats;
  • spent autocatalysts from A-1 Specialised Services and Supplies Inc. for recycling; and
  • selected base metal residues and other secondary materials.

IRS enters into either metal purchase agreements or toll refining agreements, or a combination of the two.  In metal purchase agreements a percentage of the contained value (allowing for Impala’s cost and a profit margin) is paid after an agreed processing period. In toll refining agreements, IRS charges the client a smelting, refining and handling fee and returns to the client, the metal after an agreed processing period.  Impala, in turn, charges IRS a market-related fee for its expertise and the use of its processing facilities.

With the exception of mine-to-market operations, the Group has little or no control over volumes recieved from either third party or toll treatment contracts.

Growth

Future growth in platinum output at IRS in the short-term will emanate from the Phace 2 expansion project at Zimplats which will contribute on additional 90,000 ounces of platinum in matte by FY2015. Whilst growth is expected from non-managed production, the extent and timing of this growth will be dictated by market conditions and the economic circumstances of the suppliers.

IRS continues to engage in discussions relating to the exploitation of future reserves and welcomes approaches from customers needing an established processing route for their products.

 

IRS Platinum Production

  (’000oz)  2013   2012  
  Zimplats   180   185  
  Marula   71   63  
  Mimosa   97   100  
  Two Rivers   157   145  
  Third-party purchases, recycling and toll   368   205  
  Grand total   873   698  

 

Impala Refining Services - key statistics

    2013   2012   2011   2010   2009  
Sales   (Rm)  14 696   14 069   14 273   11 069   10 507  
Platinum     8 481   7 982   8 104   6 661   5 954  
Palladium     2 675   2 464   2 169   1 227   834  
Rhodium     794   1 113   1 376   1 242   2 142  
Nickel     1 164   1 236   1 305   1 024   755  
Other     1 582   1 274   1 319   915   822  
Cost of sales   (Rm)  (13 287)  (12 730)  (12 860)  (9 910)  (9 272) 
Metals purchased     (12 926)  (12 147)  (12 649)  (10 470)  (5 822) 
Smelting     (297)  (225)  (232)  (190)  (150) 
Refining     (399)  (378)  (366)  (318)  (229) 
Other operating cost     (37)  (37)  (30)  (29)  (30) 
Increase/(decrease) in metal inventories     372   57   417   1 097   (3 041) 
Gross profit IRS   (Rm)  1 409   1 339   1 413   1 159   1 235  
Metals purchased – adjustment on metal prices
and exchange rates*  
(Rm)  177   (195)  (20)  –   –  
Inventory – adjustment for metal prices and exchange rates   (Rm)  (189)  191   (4)  –   –  
Gross profit in Implats Group   (Rm)  1 397   1 335   1 389   1 159   1 235  
Gross margin   (%)  9.6   9.5   9.9   10.5   11.8  
Revenue   (Rm)  14 696   14 069   14 273   11 069   10 507  
Direct sales to customers     111   116   401   383   424  
Sales to Impala     14 139   13 702   13 427   10 354   9 778  
Treatment income – external     358   181   383   272   243  
Treatment income – intercompany     88   70   62   60   62  
Total sales volumes              
Platinum   (000oz)  629.8   638.2   684.2   615.4   556.7  
Palladium   (000oz)  460.5   468.3   474.2   434.3   371.8  
Rhodium   (000oz)  82.5   94.1   87.1   79.6   79.5  
Nickel   (t)  8 095   8 209   7 863   7 117   6 253  
Prices achieved              
Platinum   (US$/oz)  1 532   1 634   1 691   1 432   1 215  
Palladium   (US$/oz)  659   689   655   374   255  
Rhodium   (US$/oz)  1 099   1 549   2 254   2 065   3 210  
Nickel   (US$/t)  16 314   19 723   23 757   19 031   13 695  
Exchange rate achieved   (R/US$)  8.79   7.65   7.00   7.56   8.72  
Refined production              
Platinum   (000oz)  872.3   697.5   895.1   870.1   753.8  
Palladium   (000oz)  669.8   541.1   680.6   778.7   581.7  
Rhodium   (000oz)  118.4   111.1   134.8   130.5   124.4  
Nickel   (t)  11 983   10 582   10 829   10 314   8 339  
PGM refined production   (000oz)  1 854.9   1 527.9   1 918.2   1 974.7   1 638.1  
Metal returned              
Platinum   (000oz)  188.6   120.7   219.5   233.0   194.1  
Palladium   (000oz)  190.0   147.5   210.0   259.3   180.9  
Rhodium   (000oz)  35.5   24.8   41.7   49.3   37.5  
Nickel   (t)  3 193   3 093   3 370   2 792   2 480  
*Adjustments on metal prices and exchange rates have been reallocated to gross profit from other income and expense and foreign exchange profit or loss respectively in the statement of comprehensive income.