Muted metal prices over the past few years and negative
sentiment related to anticipated weaker supply/demand
fundamentals has been largely informed by slower diesel
vehicle growth expectations, the projected rate with which the
vehicle fleet could be electrified and slowing platinum jewellery
sales in China.
While sentiment towards platinum remains subdued,
palladium and rhodium fundamentals have strengthened
significantly. Platinum pricing continues to struggle, but its
discount to both palladium and rhodium is spurring efforts to
reconsider the mix of metals used in gasoline light-duty
Implats’ view is that while palladium supply growth is likely to
outstrip that of platinum and rhodium over our forecast
horizon, the market is likely to remain in a deep and structural
deficit in the medium term.
Impact on value
- Supply/demand fundamentals have a direct impact on
metal prices and market sentiment, resulting in platinum
prices remaining subdued, with palladium and rhodium
prices growing strongly more recently.
- Low metal prices have a direct impact on profitability, the
generation of shareholder returns and our ability to fund
and grow the business into the future.
- The potential for prolonged, relatively flat platinum prices
- Palladium should continue to receive strong price support,
incentivising a partial switch back to platinum use in the
- Platinum and palladium will continue to receive demand
support from increasing emission regulations and growth
in the global vehicle fleet in the short to medium term.
- Implats uses conservative price forecasts, given muted
platinum sentiment and global risk factors.
- Group-wide cost-saving and turnaround initiatives have
been implemented over the past four years.
- To sustainably improve its competitive position,
profitability and financial returns, Implats has committed
to a value-over-volume focused strategy. The Group is
reducing its exposure to higher-cost, labour intensive
conventional operations to improve flexibility, capacity
and sustainably generate attractive returns.
- The strategic transformation of Impala Rustenburg is
designed to unleash the value of the operation, for the
benefit of all stakeholders, and for the long-term
sustainability of the Group.
- A maintained focus on cash conservation and
strengthening the balance sheet.
- Rigorous capital allocation criteria with a focus on
low-cost, palladium-rich, mechanisable assets.