About Implats
How we create value

Our mission is to mine, process, refine and market high quality PGM products safely, efficiently and at the best possible cost from a competitive asset portfolio through team work and innovation.

Business Model

IMPACTS OF OPERATING ENVIRONMENT

Macro-economic factors

Regulatory environments in South Africa and Zimbabwe

Metal pricing, supply and demand

Automotive and jewellery markets

Environmental stewardship

Technology and information

INPUTS
Our capitals

HUMAN

  • Our leadership
  • Our workforce
  • Skills and training
  • Social, ethics, transformation and remuneration practices

FINANCIAL

  • Operating cash flow
  • Equity funding
  • Debt funding

MANUFACTURED

  • Mining rights
  • Mineral Reserves
  • Plant, property and equipment
  • Utilities

SOCIAL AND RELATIONSHIP

  • Ethics and human rights
  • Employee relations
  • Organised labour
  • Community relations
  • Social licence to operate

INTELLECTUAL

  • Knowledge and procedures
  • Risk and accounting systems
  • R&D and IP
  • Geological models
  • People, governance and safety systems

NATURAL

  • Natural resources (land, air, water and biodiversity)
  • Mineral Resources and Mineral Reserves

What differentiates us:

  • Portfolio: favourable opportunity to optimise our ore mix
  • Processing capability: IRS toll refining model
  • Reduced future capital requirement


The VALUE CHAIN element of our Group strategy.

ACTIVITIES

 

STRATEGIC OBJECTIVES

REPOSITION IMPALA TO THE LOWER HALF OF THE COST CURVE

OPTIMISE THE VALUE CHAIN

IMPROVE ORGANISATIONAL EFFECTIVENESS

ENHANCE THE COMPETITIVENESS OF THE PORTFOLIO

OPTIMISE THE BALANCE SHEET AND CAPITAL ALLOCATION

PROTECT AND STRENGTHEN OUR LICENCE TO OPERATE

PROCESSES

 
 

MANAGING KEY RISKS

  1. Ability to return Impala Rustenburg to cash neutral/positive position
  2. Weak balance sheet
  3. Sustained depressed PGM basket prices
  4. A significant deterioration in safety performance
  5. Zimplats: availability of foreign currency
  6. Maintaining our social licence to operate and stakeholder relations
  7. Failure to comply with legal and regulatory requirements throughout the value stream
  8. Reduced production flexibility and smelting operations at Impala Rustenburg and Zimplats
  9. Challenged capacity and efficiencies of management layers at South African operations
  10. Security of water supply in South Africa
OUTPUTS
1.5Moz Platinum
0.9Moz Palladium
0.2Moz Rhodium
0.3Moz Ruthenium
67.3koz Iridium
79.4koz Gold
101.2koz Silver
16.0kt Nickel
10.0kt Copper
0.9kt Cobalt

ENVIRONMENTAL OUTCOMES

29.0kt Non-mineral hazardous waste recycled
411kt CO2 direct emissions
23 146Mℓ Water withdrawn

Delivering value

EMPLOYEES

  • R13.7 billion in salaries and benefits
  • R485 million invested in training
  • TB incidence rate reduced to below 300 per 100 000
  • 5 730 employees receive ART treatment

UNIONS

  • Stable and constructive relationship enables meaningful discussions on employee matters

COMMUNITIES

  • Local to site employment
  • Responsible procurement practices

REGULATORS

  • Compliance with regulatory requirements
  • Focus on developing and maintaining value-enhancing relationships
  • No level 4 or 5 environmental incidents
  • Unit water consumption decreased to 0.0020Mℓ/milled tonnes
  • Integrity of all tailings dams confirmed

SHAREHOLDERS/DEBT HOLDERS

  • 244% increase in share price
  • Enhance and protect value through the successful restructuring of the Group to return Implats to profitability within the set timeline and the ongoing focus on cost containment and efficiency improvements

CUSTOMERS

Sustainable and reliable delivery of high-quality products



 

Stakeholder review and engagement

This year, we self-assessed the quality of our relationship with the various stakeholder groups, using a spectrum ranging from weak, cordial and strong. In 2020 and beyond, we aim to build on the objective, quantifiable relationship assessment pilot project for select stakeholders, which we introduced last year.

EMPLOYEES AND UNIONS

Nature of engagement

Employee and union material matters are identified through direct and internal communication, workplace forums and regular engagement with union representatives.

JOB SECURITY AMID IMPALA RUSTENBURG RESTRUCTURING   

  • M
  • Workforce reductions and job security concerns due to restructuring and potential shaft closures at Impala

  • R
  • A cordial industrial relations climate was maintained, including throughout the s189 process for Phase 1 of the Impala Rustenburg restructuring, concluded in January 2019. A total of 1 329 people exited the organisation and forced retrenchments were limited to 117


Our proactive communications strategy and targeted engagement process to mitigate risk, included:

  • Advancing engagements with union leadership at all levels, with focus on maintaining trust
  • Job-loss avoidance measures including redeployment of employees to vacant positions at the 16 and 20 growth shafts, natural attrition, reskilling, voluntary separation, and business improvement initiatives

Effect on capitals (human; social; financial)

Reducing jobs at Impala Rustenburg will allow us to execute our strategy to restructure Impala Rustenburg, increase financial capital, and create a sustainable business which supports social and human capitals at the expense of human capital employed through job losses and social capital in the communities where we operate.

Outlook

The roll-out of phases 2 and 3 (closing 1 and 9 Shafts and associated overheads) is in progress and we continue to engage with our employees and unions, the government and community leadership.

NEGOTIATION OF WAGE AGREEMENT   

  • M
  • We conducted a detailed analysis of internal and external factors that might impact the wage negotiations, to identify key risks to mitigate and monitor. The analysis involved close communication with relevant stakeholders and intensive engagements at all levels with union leadership, particularly with the Association of Mineworkers and Construction Union (AMCU)

  • R
  • A cordial industrial relations climate was maintained, including throughout the s189 process for Phase 1 of the Impala Rustenburg restructuring, concluded in January 2019. A total of 1 329 people exited the organisation and forced retrenchments were limited to 117


Effect on capitals (human; social; financial)

Effect on capitals (human; financial) Constructive negotiation of a new wage agreement will support both Impala Rustenburg and Marula’s financial capital-enhancing objective to achieve their FY2020 future operating cost of R25 500 to R26 500 per Pt oz (stock adjusted) of the operational excellence strategy on page 72.

Outlook

We remain optimistic of a constructive wage negotiation process and the implementation of a new wage agreement that benefits employees and secures the financial sustainability of the Group.

EMPLOYEE SAFETY    

  • M
  • Despite the renewed focus on safety leadership and mining discipline driving significant improvements in our safety performance and metrics, five work-related fatalities occurred this year

  • R
  • Each of the tragic incidents were subjected to rigorous independent investigation, and learnings shared across the Group, with management actions taken to improve controls and prevent recurrence


Effect on capitals (human; social; financial)

Safe production and reaching our goal of zero harm will decrease the negative effects of the loss of life and lost-time injuries on human capital, supporting us in the execution of our operational excellence strategy by reducing the s54 and s55 stoppages and improving on production volumes, and therefore financial capital.

Outlook

The failure to identify hazards and a low appreciation for risk are routinely identified as contributing factors in significant and fatal incidents. Our culture change initiatives will assist in building resilient safety leadership and enforcing operational discipline.

DEFICIT IN LEADERSHIP COMPETENCIES   

  • M
  • Despite the renewed focus on safety leadership and mining discipline driving significant improvements in our safety performance and metrics, five work-related fatalities occurred this year

  • R
  • Each of the tragic incidents were subjected to rigorous independent investigation, and learnings shared across the Group, with management actions taken to improve controls and prevent recurrence


ADDRESSING BARRIERS TO GENDER EQUALITY   

  • M
  • Implats also voluntarily participated in a study by the Commissioner of Gender Equality, which resulted in a report that highlighted areas that posed as barriers to gender equality at Impala Rustenburg

  • R
  • In response to these findings, we took steps to improve our approach to creating an environment conducive to gender equality and address obstacles to the employment, retention and advancement of women which included introducing a gender mainstreaming policy, designing campaigns on sexual harassment, revising graduate programmes for the advancement of women and improved female facilities on our mines


Effect on capitals (human; intellectual)

Improving leadership capacity and competencies will assist us in repositioning Impala Rustenburg to the lower half of the cost curve and improve operational effectiveness.

Outlook

By empowering our people to “Leading the Implats Way”, we are supporting the transformation towards our desired organisational culture of care and performance, driving organisational success through our people.

GOVERNMENT

Nature of engagement

Meetings with officials from local, provincial and national government. Compliance audits, Minerals Council South Africa Parliamentary Portfolio committee, Mining Phakisa and Mining Industry Growth, Development and Employment Task Team.

South Africa

ECONOMIC AND SOCIAL IMPACTS OF IMPALA RUSTENBURG RESTRUCTURING   

  • M
  • There are concerns regarding the socio-economic impacts of job losses from retrenchments

  • R
  • We continue to proactively manage the engagement process with government to demonstrate our willingness to work collaboratively with all social partners to mitigate the socio-economic impacts of the restructuring process as far as possible


Effect on capitals (social and relationship)

Job losses associated with the restructuring of Impala Rustenburg will have an adverse impact on the socio-economic environment of the communities where we operate in the short term and reduce our financial capacity to meet our SLP commitments. The successful delivery of a restructured Rustenburg operation, however, will result in sustainable jobs and SLP contributions in the longer term.

Outlook

We aspire to sustain good relations and engagement processes.

COMPLETION OF SECOND GENERATION SLP COMMITMENTS WITHIN SET TIMELINES   

  • M
  • Impala Rustenburg and Marula will not be able to complete all its SLP commitments within the set deadline on December 2018 due to delays in implementation of certain SLP II infrastructure projects; initially due to late approval of the SLP following community unrest related to the 2014 platinum strike, and in recent years hampered by the Company’s financial constraints

  • R
  • To counter this, a s102 application was submitted to extend the SLP implementation period by two years to December 2020


Effect on capitals (human; social; financial)

Job losses associated with the restructuring of Impala Rustenburg will have an adverse impact on the socio-economic environment of the communities where we operate in the short term and reduce our financial capacity to meet our SLP commitments. The successful delivery of a restructured Rustenburg operation, however, will result in sustainable jobs and SLP contributions in the longer term.

Outlook

We await a response to the requested time frame extension.

COMPLIANCE WITH PROVISIONS OF NEW MINING CHARTER   

  • M
  • The new Mining Charter 2018 contains a number of provisions that are cause for concern

  • R
  • We are confident that with the right engagement through the Minerals Council South Africa, notable uncertainties including local content and empowerment requirements and incentives for reindustrialisation will be resolved


Effect on capitals (natural; manufactured; financial; human)

The new Mining Charter presents positive provisions for human and social capital, and secures our access to natural capital. However, the high cost of compliance with the regulation will have the effect of significantly reducing our ability to generate/acquire the financial capital required to implement our strategic objectives resulting in the long-term depletion of our other capitals.

Outlook

We await the outcomes of the judicial review process and finalisation of the charter.

Zimbabwe

ECONOMIC CHALLENGES IN ZIMBABWE   

  • M
  • Supporting the Zimbabwean government’s efforts to revive the economy amid increasing tensions provoked by cash and foreign currency shortages that have impacted the availability of fuel, basic commodities and pharmaceuticals

  • R
  • Following a three-day nationwide strike after the government increased fuel prices, Zimplats put measures in place to ensure the safety of its employees, the protection of assets and the continuation of uninterrupted business operations

  • Our priority has been to address the economic and fiscal policy constraints of the country. Positive developments for the sector include the deferment of the export levy on unbeneficiated PGMs for a further two years, and the relaxation of the contentious indigenisation policy
  • Zimplats created several opportunities to share the Company’s narrative on operations and business initiatives with key stakeholders whose support we require. This included a presentation by the chairman of Zimplats to the President of Zimbabwe on Zimplats’ growth trajectory, its contribution to the economy and the community

Effect on capitals (social and relationship; human; financial)

The economic challenges in Zimbabwe have a direct impact on the social and financial well-being of our employees and the communities in which we operate. It strains access to financial capital and the ability to produce while also pressurising operating costs and access to state-supplied resources such as electricity.

Outlook

We will maintain ongoing targeted engagements with the leadership of the Zimbabwean government to promote value-enhancing relations.

COMMUNITIES

Nature of engagement

Community leadership engagement meetings, community trust meetings, one-on-one meetings

EMPLOYMENT, PROCUREMENT, SOCIAL INVESTMENT AND SUPPLIER OPPORTUNITIES   

  • M
  • There is an increasingly disproportionate community reliance on the organisation for employment, procurement and social investment opportunities. Restructuring at Impala Rustenburg has also impacted employment levels and recruitment (20 people recruited from local community – a 14% decrease year-on-year). This is exacerbated by the shortage of critical skills in the mine communities

  • R
  • To address this, the organisation invests in skills development initiatives that make members of local communities employable and promotes employment through local procurement practices and social projects (627 jobs created). In 2019, we increased local host community procurement (Tier 1) spend by 23% to R1.6 billion at Impala Rustenburg and by 82% to R70 million at Marula


Effect on capitals (social and relationship; financial)

The broader economic challenges facing South Africa coupled with Implats’ immediate priority to restructure its Impala Rustenburg operations have reduced our short-term capacity to financially invest in our social and relationship capital.

Outlook

Impala has a policy of employing individuals from communities close to its operations where possible and will continuously develop community members and identify opportunities for entrepreneurs in the mine lease area.

CUSTOMERS

Nature of engagement

Tender and contract processes, supplier forums, one-on-one meetings, industry forums, customer feedback and reputation surveys

BEING A REPUTABLE AND RESPONSIBLE SUPPLIER OF HIGH-QUALITY PGM PRODUCTS THROUGH INNOVATION   

  • M
  • Customer custodianship is a multi-faceted issue, governed by several policies, procedures and legislation. It entails continuous oversight including internal and external assurance. We strive to ensure a competitive advantage by differentiating our product suite in the market based on product quality, reliability of supply, and a willingness to adapt to changing customer needs

  • R
  • Strategic review meetings held for both the World Platinum Investment Council (WPIC) and the Platinum Jewellery Development Association (PJDA, holding company for PGI) during February 2019. The meetings were to identify gaps in the current strategies and to formulate a way forward

  • Meetings were also held with several customers to maintain positive relations. This included hosting the CEOs and presidents of our major Japanese customers

Effect on capitals (financial; social; intellectual; manufactured)

Remaining a reputable and responsible supplier means that we retain the ability to deliver our products by successfully executing on the Impala Rustenburg restructure and optimising our value chain strategies.

We employ financial capital to contribute to the development of platinum demand by supporting the Platinum Guild International (PGI), World Platinum Investment Council (WPIC), Platinum Jewellery Development Association (PJDA) and International Platinum Association (IPA) through marketing spend and the development of intellectual capital needed to grow new markets and formulate a way forward for the platinum industry.

Outlook

The demand for our metal remains strong.

SHAREHOLDERS AND INVESTOR COMMUNITY

Nature of engagement

Roadshows, results presentations, investor conferences one-on-one meetings

FINANCIAL PERFORMANCE AND IMPLEMENTATION OF STRATEGIC REVIEW   

  • M
  • Ability to generate positive returns on investment in a sustainable manner – with specific interest in:

  • Our balance sheet strength
  • The Group’s ability to implement the Impala Rustenburg turnaround strategy
  • Cost containment to achieve operational efficiencies
  • Compliance with regulatory requirements and maintaining our social licence to operate
  • R
  • A cordial industrial relations climate was maintained, including throughout the s189 process for Phase 1 of the Impala Rustenburg restructuring, concluded in January 2019. A total of 1 329 people exited the organisation and forced retrenchments were limited to 117

  • Finalisation of the Implats capital allocation framework
  • Securing facilities and flexibility to manage liquidity over the short to medium term
  • Rigour and conservatism around monthly forecasting and over budgeting process
  • Ongoing monitoring of covenants and headroom to ensure availability of facilities over the strategic review implementation
  • Ongoing review of actual and forecast cash prioritisation of spend including optimisation of Group cash balances and debt
  • Ongoing cost control

Capital impact: All capitals

The financial result and increase in financial capital for shareholders is the result of the combined use of all capital inputs in a responsible manner, resulting outcomes from our processes, applying our strategies towards managing risk, exploiting opportunities and producing outputs

Outlook

  • Despite improved market outlook, Implats remains committed to its long-term strategic intent to favour value over volume, embed operational improvements and build sustainability by consistently producing in a safe, productive, responsible and profitable way
  • Focus in FY2020 will be on advancing the phased restructuring of Impala Rustenburg while taking advantage of the operational improvements realised over the past year and maintaining delivery from all other Group operations
  • Project focus will be centred on 20 Shaft, ensuring that the continued commitment to invest and operate is matched with improved project delivery and accountability
  • Organisational effectiveness and stakeholder engagement remains key to navigating the successful conclusion of wage agreements and the planned reduction in Implats’ workforce in a socially responsible way, while limiting the potential for operational interruptions
  • In Zimbabwe, efforts to maintain open and constructive engagement with the government will continue amid a changeable economic and political environment

GOVERNANCE, DISCLOSURE AND CONTRIBUTIONS TOWARD ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) RELATED MATTERS    

  • M
  • In recent years, the sustainable development agenda has been gaining ground, with investors and other stakeholders increasing their focus on environmental, social and governance issues

  • R
  • Implats is highly rated among its peers in demonstrating socially and environmentally responsible practices and good governance (ESG indicators), and is committed to making lasting positive contributions to the communities around our operations by:

  • Developing our understanding of how we can optimise our contribution towards the attainment of the United Nations Sustainable Development Goals (SDGs) (refer page 66)

This work builds on our ongoing commitment to the UN Global Compact and its 10 principles.