ANNUAL INTEGRATED REPORT 2019 OVERVIEW
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GLOBAL MACRO-ECONOMIC FACTORS, AS WELL AS REGIONAL AND DOMESTIC DYNAMICS, CONTRIBUTED TOWARDS YET ANOTHER CHALLENGING YEAR FOR IMPLATS. HOWEVER, THE RESULTS THE COMPANY HAS DELIVERED PROVIDE AN ENCOURAGING INDICATION THAT ITS TURNAROUND STRATEGY IS BEARING FRUIT, AND THAT IT IS WELL ON COURSE TO ACHIEVING ITS GOALS OF CEMENTING ITSELF AS A RESILIENT, THRIVING AND SUSTAINABLE ENTITY.
DYNAMIC OPERATING CONTEXT
In South Africa, factors such as rand volatility, wage negotiations, community dissatisfaction and the operational and financial crisis at Eskom all posed challenges to domestic producers. In Zimbabwe, the government introduced a local currency, the RTGS, and brought an end to the multi-currency monetary system introduced in 2009. Regrettably, Zimbabwe has seen the return of crippling hyper-inflation. The economic crisis has been compounded for Zimbabwe’s citizens by the effects of the drought, power cuts of up to 18 hours a day and shortages of everything from bread to motor fuel.
As an industry, we have started to see a shift away from a prolonged period of muted demand and subdued prices. While platinum pricing remains constrained, the fundamentals for palladium and rhodium have strengthened over the past year. Increased environmental regulations accelerated demand for these metals, which are used in gasoline vehicle emission systems. Pessimistic diesel sentiment impacted platinum negatively and stimulated gasoline car sales, which in turn further supported palladium and rhodium.
Domestically, platinum miners continue to face challenging stakeholder expectations. Government seeks enhanced transformation, job creation and taxes from a shrinking mining sector. Communities, frustrated with rising unemployment and poor service delivery, turn increasingly to private sector employers to meet their expectations. Organised labour seeks to meet its mandate of securing better conditions and higher wages for members from a resources sector facing significant challenges.
ADVANCING IMPLATS’ TURNAROUND STRATEGY
These pressures, among others, resulted in Implats’ strategic restructuring to position the Group to deliver sustainable outcomes and benefits to all its stakeholders.
The Group strategy of “value over volume” is making sound progress in lessening the Group’s exposure to high-cost, deep-level conventional mining, with the first phase of the Impala Rustenburg restructuring complete, and the second phase in implementation. A sustained turnaround at Marula and a return to profitability at Impala during the year have provided further impetus in this journey.
The Group has also made progress in enhancing the competitiveness of the portfolio of assets. Some 37% of all assets are now mechanised, the metal mix is shifting towards a higher palladium bias, the palladium-rich Waterberg project has advanced, and Impala Refining Services is now housed within Impala.
The stresses of the past several years had left Implats in a severely weakened financial position, which meant Impala Rustenburg’s return to profitability was critical for the Group to be sustainable and meet stakeholder expectations. I am pleased to report that today, Impala Rustenburg is generating free cash flows. Together with solid performances from all other operations, the transformation of the Group’s financial position is profound. Cash, net of debt, improved by R6.4 billion (>100%) to R1.1 billion, and at year-end, the Group had financial headroom of R12.2 billion available: R8.2 billion in cash and facilities of R4.0 billion. Post-year-end, the successful early conversion of the Implats US$3.25% convertible bonds further strengthened the balance sheet by some US$250 million.
STRENGTHENING OUR LICENCE TO OPERATE
Safety remains an ongoing priority. During the year, management re-doubled its efforts to improve the Group safety record. The focus on leadership visibility, interaction and coaching is changing the way people behave. The progress was supported by our sustained safety investment in targeted safety initiatives, technical solutions and training across the Group.
Despite efforts and gains that have been made in this arena, it is deeply regrettable that five lives were lost at managed operations during the year. We remain unwavering in our commitment to achieving our vision of zero harm.
The year saw encouraging improvements in promoting health and well-being in the workplace. Encouraging results were achieved in reducing tuberculosis and HIV levels among employees, a steady decrease in noise-induced hearing loss was reported, and positive results were achieved from our educational and counselling interventions to address employee over-indebtedness and mental health.
Implats’ environmental policy commits the Group to demonstrating responsible stewardship of our natural resources and to mitigating environmental impacts of our activities. I am delighted that Implats recorded no fines or sanctions for non-compliance with environmental regulations during the year under review, and no “major” (level 5) or “significant” (level 4) environmental incidents at any of our operations since 2013. All our operations are certified against ISO 14001:2015 for their environmental management systems.
Water is our most significant environmental concern – given our water-scarce operating environments. Progress was made in our water conservation strategies, in line with our commitment to reduce our levels of potable water used and increase operational reliance on recycled water.
Tailings represent a major environmental liability and the integrity of tailings dams is under increased global scrutiny following serious tailings dam breaches in the mining industry worldwide in recent years. The Group conducted a rigorous independent review of the management and monitoring of its four active tailings storage facilities (TSFs) at managed operations during the year and I am pleased to report that the results of the latest audits all attest to the integrity of Implats TSFs in South Africa and Zimbabwe, as well as the high level of compliance to standard operating procedures.
It is gratifying that Implats remains a constituent of the FTSE/ JSE Responsible Investment Index Series, which identifies South African companies that demonstrate socially and environmentally responsible practices and good governance. In the 2018 Index, Implats scored an overall ESG rating of 4.2 out of 5, versus the platinum and precious metals sub-sector average of 3.3 out of 5.
The sustainability of our mining activities depends on the well-being and prosperity of our mine communities. We continue to invest in socio-economic development projects that drive our transformation requirements. These many initiatives are fully explored in our 2019 sustainability development report, which accompanies the 2019 suite of corporate reports.
ETHICS, INTEGRITY, ENGAGEMENT
Implats is committed to promoting the highest standard of corporate governance and ensuring that our practices comply with the principles of the King IV Code of Corporate Governance for South Africa. During the year, an ethics management audit was conducted, and action plans are now being implemented to address areas needing improvement.
Stakeholder engagement remains key to the successful implementation of the Implats strategy. We have advanced the implementation of an effective stakeholder engagement strategy, paying cognisance to King IV and the AA1000 Assurance Standard principles of materiality, completeness and responsiveness. During the year, a wide range of stakeholder engagements were conducted across a broad spectrum.
The goal of contributing to socio-economic transformation remains a strategic imperative. The Group actively seeks to play a role in meeting government social and economic development goals in South Africa and Zimbabwe. We are committed to complying with the requirements of South Africa’s MPRDA, and to meeting the expectations set out in the Mining Charter.
In Zimbabwe, we continue to engage with the government to support the growth and diversification of the PGM industry, a key component of the country’s economic recovery programme. Key developments during the year have seen the relaxation of the indigenisation policy, which has encouraged some investment inflows, and the suspension of a proposed tax on unrefined platinum exports until the end of 2022. Zimplats operated for its first year under the conditions of new converted mining rights and normalised tax provisions. We continue to engage with the Chamber of Mines on areas of uncertainty around beneficiation policy.
South Africa and Zimbabwe have both seen positive legislative changes during the year, and we had meaningful and fruitful dialogue with leaders in both countries. However, the economic crisis in Zimbabwe, together with muted economic prospects for South Africa, have implications for companies operating in both countries.
While the near-term outlook for platinum has improved, the current strength in both palladium and rhodium fundamentals are expected to persist, supported by dollar metal prices. This bodes well not only for an increased role for PGMs in cleaning the atmosphere, but also for the increasing opportunities to use platinum-catalysed fuel cells for zero-emission, carbon-free energy to address global decarbonisation.
We remain committed to our long-term strategic intent to favour value over volume, embedding achieved operational improvements to build sustainability through consistently producing in a safe, productive, responsible and profitable manner.
During the year we welcomed chief financial officer Meroonisha Kerber, independent non-executive director and audit committee chairman Dawn Earp, and independent non-executive director and audit committee member Preston Speckmann to the board of directors with effect from 1 August 2018. Post the end of the reporting period, Udo Lucht resigned from his position as a non-executive director. Boitumelo Koshane was appointed as a non-executive director representing the Royal Bafokeng Nation. On behalf of the board, I extend my sincere appreciation to Udo for his contribution to our deliberations. I bid all our new colleagues a warm welcome to our board and wish them well in serving the Company and its many stakeholders.
I extend my sincere appreciation to my fellow board members, the Implats management team and all Implats employees for their contribution to what has been a pivotal year for the Group.
CHIEF EXECUTIVE'S REVIEW
OUR STRATEGIC TRANSITION GAINED CONSIDERABLE MOMENTUM AND OUR FIRM FOCUS OVER THE IMMEDIATE FIVE YEARS IS TO RE-ESTABLISH OURSELVES AS A HIGH-VALUE, PROFITABLE AND COMPETITIVE PGM PRODUCER.
The Implats team was driven by a singular purpose over the past two years: to ensure the future sustainability of this company. The results speak for themselves and we believe Implats is now on a path to a sustainable future as a quality platinum producer, creating long-term value for all its stakeholders.
Implats achieved stellar results in FY2019. A strong operational performance in key areas allowed the Group to harness the benefit of improving market conditions and rising rand PGM pricing during the year and deliver a substantially improved financial result with healthy free cash flow generation and a return to a closing net cash position at year end.
Our strategic transition gained considerable momentum and our firm focus over the immediate five years is to re-establish ourselves as a high-value, profitable and competitive PGM producer. Progress was made in effecting an operational and financial turnaround at Impala Rustenburg – a truly commendable achievement. The results flowing from the Rustenburg complex – in terms of safety, productivity and cost efficiency – boosted our performance overall and reflect the value that can be derived from this operation through the successful completion of the phased restructuring plan.
The safety and health of employees remains a priority. Safety for the year told the tale of both triumph and tragedy. For much of the year the Group saw an extended period of unprecedented safety improvements. We achieved our best-ever safety performance and were leading the industry in fatality-free safety rates.
However, a tragic fourth quarter saw a total of six workrelated fatalities during the full year – five at managed operations and one at our Mimosa joint venture. The Implats board and management express their sincere condolences to the families and friends of our deceased colleagues. Recognising the severe impacts of the loss of life to the affected families, we offer family support across Group operations in South Africa and Zimbabwe.
Implats remains unwavering in our commitment to achieving our vision of zero harm. Each tragic incident was subject to a rigorous independent investigation, with learnings shared across the Group and action taken to improve controls and prevent reoccurrence.
While there was a recent regression in the safety performance, the Group achieved a 28% improvement in the fatal injury frequency rate and a 12% improvement in the lost-time injury frequency rate during the year. In addition, nine of the 15 Group operations achieved their “millionaire” and “multimillionaire” fatal-free status, meaning they have operated more than a million shifts without a fatality. Zimplats’ consistent safety record, notwithstanding one fatality this year, was recognised with various safety recognitions for outstanding performance in the Zimbabwean industry.
DELIVERING ON STRATEGY
The Group took appreciable strides this year towards its stated strategy to prioritise value over volume in a zero harm environment. This includes six strategic objectives to:
- Successfully restructure Impala Rustenburg;
- Optimise the value chain;
- Improve operational effectiveness;
- Enhance the competitiveness of our portfolio;
- Optimise our balance sheet and capital allocation priorities and processes; and
- Protect and strengthen our licence to operate.
The execution of the Impala Rustenburg restructuring plan remains well on track. This year saw the successful completion of the first phase, which set out to optimise the overhead structure at the operation aligned to a smaller and more productive future mining footprint. A multitude of stakeholder engagements were undertaken to conclude the first phase and to consider the next phase to be implemented in FY2020, which will focus on the planned closure or outsourcing of 1 Shaft and the closure of 9 Shaft, which is nearing the end of available mine life.
Post-year-end, a section 189 (Labour Relations Act) notice was issued for the second phase. Throughout the implementation of the restructuring, there is an overriding imperative by all stakeholders to ensure job losses are minimised through various avoidance measures. These include transferring employees to vacant positions at growth shafts, natural attrition, reskilling, voluntary separations and exploring viable commercial alternatives to shaft closure, where possible.
Management continues to explore ways to improve safety, productivity and cost efficiency across the Group. Any material changes in the operating and business performance, or the pricing environment, will be considered as we seek alternatives to further enhance the competitiveness of our full portfolio.
To this end, the Group maintained the recently enhanced performance at Marula, while sustaining industry leading performances at Mimosa, Two Rivers, Zimplats and Impala Refining Services (IRS). Furthering Implats’ strategy to grow exposure over time to lower-cost, shallow, mechanised operations with enhanced palladium exposure, the Waterberg Definitive Feasibility Study (DFS) is scheduled for completion in the first half of FY2020 and this, together with the granting of required statutory permits, will trigger Implats’ decision on the form of its further participation.
The improved operational and financial performances enabled the Group to significantly bolster its balance sheet this year. Material progress was made post-year-end too, with the early incentivised conversion of the US$ convertible bonds, together with the cancellation of the cross-currency interest rate swap (CCIRS). This reduced the carrying value of Group debt by R3.1 billion while lowering the annual interest charge by R319 million.
Balance sheet flexibility enhances the Group’s ability to pursue value-accretive organic and acquisitive opportunities, is aligned to our capital allocation framework objectives and accelerates the journey towards delivering sustainable shareholder returns through dividend payments and the contemplation of share buybacks.
The Group delivered several encouraging improvements in key areas, despite several operational challenges, which included a seven-day production stoppage at Marula, ongoing split-reef challenges at Two Rivers, Eskom’s power disruptions during the second half of the year and extended furnace maintenance resulting in a slower-than-planned de-stocking of accumulated concentrate inventories. Group refined PGM and platinum production were respectively 5% and 4% higher than the previous year, while unit costs on a stock adjusted basis increased by 4% to R23 942 per refined platinum ounce.
Platinum ounces produced in concentrate from mine-tomarket operations declined by 1% to 1.31 million ounces (FY2018: 1.32 million ounces). Higher volumes from Impala, together with sustained performances at Zimplats, Mimosa and Marula were partially offset by a weaker contribution from Two Rivers. Third-party concentrate volumes received fell by 27% to 189 000 ounces (FY2018: 259 000 ounces) in line with market guidance, and as a result of a large once-off toll refining contract concluded in FY2018.
The Group spent R3.8 billion (FY2018: R4.6 billion) on capital projects at Impala, Marula and Zimplats during the year, a decline of 18% from the prior reporting period, in line with slowing spend on 16 and 20 Shafts and increased prudence in allocating stay-in-business capital spend.
Higher received pricing drove margin expansion and each of the Group’s managed operations delivered positive free cash flow in FY2019, with Mimosa and Two Rivers continuing to pay dividends during the year.
Critical Impala Rustenburg complex posts a turnaround
The year was characterised by a step-change in operational momentum at Impala Rustenburg. Despite the closure of 4 Shaft and the scaling down of production at 1 Shaft, mill throughput increased due to improved delivery at 12 and 14 Shafts, and the ramp-up in volumes from 16 and 20 Shafts. Stock-adjusted platinum production increased by 4% to 683 000 ounces.
In FY2018 a major furnace rebuild and a fire at the number 5 furnace transformer reduced available smelting capacity. This year the number 3 furnace was taken offline for a full scheduled rebuild and returned to operation in May 2019. In the previous year, Impala refined metal volumes were replaced by IRS ounces due to constrained smelter availability and the IRS contractual terms. Due to increased availability this year, refined platinum production attributable to Impala Rustenburg increased by 30% to 754 000 ounces.
In FY2019, Impala delivered R1.9 billion in free cash flow following a year when cash outflows of R6.5 billion were compounded by negative working capital movements due to the accumulation of pipeline inventory. The positive cash flow generation resulted in a contribution of R1.1 billion to Group headline earnings in the period under review.
The completion and ramp-up of production at the 16 and 20 growth shaft projects is a key pillar in achieving the goals of the restructuring. Progress at 16 Shaft was hampered this year by a fatal incident and hoist rope failure on the main shaft system, which impacted achieved production and development targets. Notwithstanding, significant progress was made, with platinum production rising to 90 000 ounces (FY2018: 74 000 ounces).
A comprehensive review of 20 Shaft’s future production potential and strategic optionality was completed during the year. This followed another period of sustained under delivery as a result of challenging ground conditions. Leadership capacity at the shaft was significantly strengthened and strict quarterly performance parameters instituted. The construction phase of the capital project was completed during the year, with platinum production increasing to 74 000 ounces (FY2018: 69 000 ounces). Full production is now expected 12 months later than previously guided, from July 2022.
Impala Refining Services continues to shine
Impala Refining Services (IRS) delivered another significant financial contribution to the Group, aided by higher rand PGM pricing for its basket of production and sales. IRS is now a fully integrated division of Impala and generated R3.4 billion in free cash flow, contributing R2.1 billion to Group headline earnings.
Marula stumbles on community contestation
The successful restructuring of mining activities during 2017, together with higher rand pricing for palladium and rhodium, fundamentally changed the production and financial potential of Marula. The operational performance was marred by a weak third quarter, during which a seven-day community stoppage impacted mined and milled volumes.
Management continues to prioritise a lasting resolution to intermittent community disruptions. The capital footprint, staffing levels and mine planning are all in place to support annual production of more than 90 000 ounces of platinum in concentrate per annum, in a pricing environment benefiting a rand revenue basket with high relative rhodium and palladium content.
Zimplats and Mimosa deliver consistent production
Implats’ Zimbabwean assets – Zimplats and Mimosa – delivered another year of consistent, efficient and profitable production. At Zimplats, increased volumes from the now fully redeveloped Bimha Mine compensated for the closure of opencast mining activity in FY2018. Costs were well contained with absolute savings due to the closure of the opencast section, reduced treatment fees from the export of concentrates in the previous year, and tailwinds from the impact of a depreciating local currency on in-country input pricing. Free cash flow and profitability benefited from the higher dollar basket price, and lower costs and capital. Zimplats declared an interim dividend of US$20 million and, post the end of the financial year, a final dividend of US$45 million was declared.
The development of Mupani Mine continues to run ahead of schedule and ore contact was reached in the fourth quarter of the year. Surface infrastructure development is being prioritised to facilitate earlier-than-planned mining and steady-state platinum production of 90 000 ounces is expected in 2029.
Our Mimosa joint venture operation posted another stable operating performance, a commendable achievement given its maturity, its limited scope for volume and efficiency gains and the challenges presented by the operating environment in Zimbabwe. During the year Implats received dividend payments totalling R153 million from Mimosa.
Two Rivers adapts to its new normal
A challenging operating period typified the year for our Two Rivers joint venture operation. Despite pleasing absolute cost controls and reasonable delivery against targeted development, mining and milling volumes, the impact of continued mining into low-grade, split-reef areas and consequential lower recoveries, resulted in a disappointing platinum production and unit cost performance in FY2019.
However, Two Rivers enjoys a well-earned reputation as a safe, profitable and efficient producer. While lower grades will remain a key feature for the foreseeable future, management is prioritising improved mining flexibility into new higher-grade ore reserves.
Given its competitive industry position, Two Rivers is expected to remain a valuable cash contributor to the Group. During the year Implats received dividend payments totalling R241 million from Two Rivers.
Higher sales volumes for the Group, combined with stronger rand PGM pricing resulted in a significantly improved financial performance. This was characterised by positive cash flows across the Group. Revenue improved by 36% to R48.6 billion, gross profit increased five-fold to R6.8 billion and headline earnings of R3.0 billion compared to a loss of R1.2 billion in the prior year. Net cash generated from operating activities improved to R10.7 billion, yielding R7.7 billion in positive free cash flow after capital investments of R3.9 billion. Implats made debt repayments of R2.2 billion during the year and ended the reporting period with gross cash of R8.2 billion, a net cash position of some R1.1 billion and liquidity headroom of R12.2 billion.
The optimisation of the Group’s balance sheet via the reduction and restructuring of existing debt is a key strategic pillar to reposition Implats as a profitable, sustainable and competitive business with clear capital allocation priorities. The balance sheet remains strong with undrawn revolving credit facilities of R4.0 billion available until June 2021.
Strong cash generation during the year, together with the outperformance of Implats equity, allowed the Group to successfully induce early conversion of its US$250 million convertible bonds in July 2019, further strengthening the balance sheet in line with guided capital allocation priorities.
MARKET FUNDAMENTALS BEGIN TO SHIFT
For the past several years we have been operating in an environment where the platinum market has been oversupplied, compounded by a drop-off in demand from the automotive and jewellery sectors. While platinum pricing continues to struggle, its discount to both palladium and rhodium has spurred efforts to reconsider the mix of metals used in gasoline light duty catalysis.
The decarbonisation opportunities presented by fuel cells and a hydrogen economy are gaining growing recognition. The ability to provide zero-emitting, carbon-free energy through fuel cell technology is more widely accepted and took centre stage at the G-20 Summit in June. This structural hedge to the expected declining share of pure internal combustion powertrains in the longer-term is a vital element to the sustainability of the platinum market.
Jewellery remains a key source of platinum demand and we continue our work with Platinum Guild International (PGI) on initiatives aimed at reigniting growth in the Chinese market, while delivering initiatives to grow demand in India, the US and Japan.
The fundamentals for both palladium and rhodium have strengthened over the past year. Palladium growth is likely to outstrip that of platinum and rhodium in the medium-term as producers target mechanised assets with greater capital efficiency and strong by-product credits to reduce the market risk to medium-term palladium demand.
A DYNAMIC SOCIO-POLITICAL OUTLOOK
We remain deeply committed to advancing our social licence to operate and to community commitments as outlined in our social and labour plans (SLPs), and we routinely go beyond these commitments. Levels of inequality in South Africa continue to grow, compounded by the chronically high unemployment rate. The demands on mining companies to provide jobs, procurement contracts, infrastructure, and health and education facilities reflect community frustration with this socio-economic reality and slow government service delivery.
We intensified our community and stakeholder engagement activities during the year and continue to focus on improving our relationships with our communities and the South African and Zimbabwean governments, at all levels. Stakeholder engagements in South Africa were principally focused on progressing the restructuring at Impala Rustenburg, community challenges at Marula, and preparing for wage negotiations, which began in July 2019. In Zimbabwe, regular interactions with the government continue to prioritise impacts brought about by severe power constraints and recent changes in monetary policy.
We continue to engage in both countries to encourage the growth and predictability necessary to ensure Implats can continue its major contribution to the South African and Zimbabwean economies.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE HIGHLIGHTS
The operating philosophy at Implats is underpinned by a value system centred on long-term sustainability. Interventions to reduce the impact of TB and HIV/Aids on our employees have had positive results. Levels of both TB and HIV/Aids were kept under control, with improvements in most performance indicators. The Group enhanced employee financial well-being programmes to mitigate mental health challenges associated with financial difficulties, especially over-indebtedness.
Implats maintained a good performance across key areas of responsible environmental stewardship. All operations are now certified against ISO 14001:2015 for environmental management systems. No major environmental incidents were recorded during the past year. Water use remains a critical priority, along with a focus on driving environmental. In response to tragic events earlier in the year in Brazil, Implats commissioned independent audits of its active tailings dams during the year. The studies confirmed the integrity of all the Group’s tailing facilities, with detailed information now published.
Host communities remain vital stakeholders and Implats continues to prioritise sustainable community development and value-accretive relationships. The Group is cognisant of the economic challenges faced in most of the platinum producing areas and recognises the importance of its continued contribution during these times. The South African operations continued to make good progress on increasing levels of localised and preferential procurement and local-tosite procurement increased to 23% of total spend (approximately R1.7 billion during the year). In Zimbabwe, Zimplats continues to deliver pleasing results through its local procurement and local enterprise development activities.
Implats delivered effectively on its social and labour plan (SLP) commitments at the South African operations, and our targeted corporate social investments in Zimbabwe. The South African operations continue to collaborate with key stakeholders on third generation, five-year social and labour plans.
Implats remains a high-ranking constituent of the FTSE/JSE Responsible Investment Index Series, designed to identify South African companies that demonstrate socially and environmentally responsible practices and good governance.
OUR PEOPLE AND CULTURE
We recognise the role culture plays in the success and sustainable future of Implats. Creating a high-performance culture is crucial to the success of the organisation. Throughout the past year several interventions were conducted to establish the current and desired state of the Implats culture. A clearly defined and high-performance “Implats way” culture was defined and is being cascaded to all business units and purposefully practised. This is supported by a “Leading the Implats Way” leadership programme based on a care and growth methodology.
We made further strides in our commitment to employee diversity. Five out of 13 board members are female and good progress was made at senior level, where the representation of historically disadvantaged South Africans (HDSAs) increased to 50% from 48%, with female HDSA representation increasing to 20% from 18%. We continue to implement targeted interventions to advance gender mainstreaming.
This was a transformational year for Implats with progress made on several strategic imperatives and aspirations. A safer and more efficient operating result was delivered to plan – and into better-than-expected rand PGM pricing. This allowed Implats to generate substantial free cash flow and opportunistically induce early conversion of the US$ bond, extinguishing a material debt liability in a cost-effective and value-accretive way. As a result, we substantially expedited the objective of strengthening the Group balance sheet and improving Implats’ financial position as it continues to implement the key steps of its restructuring.
Despite the 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.
The focus in 2020 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. Our 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. The focus on 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.
CONCLUSION AND APPRECIATION
Our ability to deliver on our strategy is firmly founded on the dedicated team made up of 50 712 employees (including contractors) and led by an enthusiastic leadership team with a relentless focus on delivering value to the business. Our achievements are a direct result of this amazing team’s commitment, accountability, effort and determination. I extend my sincere gratitude to every member – working together, we will ensure Implats has a resilient future for the benefit of all its stakeholders. I also thank the Implats board for its considered guidance during the year and Chairman, Mandla Gantsho, for his continued sound leadership.
Implats has a diverse and competitive asset portfolio, an experienced and driven management team, and a history spanning some 50 years. We remain confident in the long-term fundamentals for PGM demand and are committed to being at the forefront of PGM supply. I look forward to the developments of the new year and a continuing record of operational excellence.