[DEBATE] : (Fwd) Implats: nothing but a good experience in Zimbabwe"
pbond at mail.ngo.za
Tue Aug 29 02:20:50 BST 2006
(Fascinating discussion between the sceptical capitalist press and a
confident capitalist in league with an apparently duped Mugabe: "KEITH
RUMBLE: We had to hand back about a third of our resources. MINEWEB:
Right. KEITH RUMBLE: And those were resources we would not have
exploited for many, many years into the future. MINEWEB: Now you are
planning to spend $258m on the expansion programme at Zimplats. You must
be pretty confident that this agreement’s going to last and that
Zimbabwe as a country is going to become – or remain as stable as it is
now. What are your feelings? KEITH RUMBLE: Well it helps to run a
business that is a hard-currency-determined business. So we’re not
really open to the vagaries of the local currency effects there, but
we’ve had nothing but a good experience in Zimbabwe.")
Zimbabwe critical to Implats growth
Posted Fri, 25 Aug 2006
JOHANNESBURG (Mineweb.com) --Impala Platinum (Implats) CEO Keith Rumble
says that the group’s Zimbabwe output could grow by more than threefold
by 2010. In its quest for growth, Rumble has identified Zimbabwe as
Implats’s “largest growth opportunity.”
Zimplats, as the Zimbabwe subsidiary is known, produced 90,000 ounces of
platinum for the year ended June 2006. A $258m expansion programme has
already been approved to increase output to 160 000 ounces a year. The
expansion, says Rumble, will create 1,200 new direct jobs and 3,000
contractor jobs. A new 1.5m tpa concentrator will be constructed.
But Rumble says that a project team is studying the viability of an
additional expansion programme, which, if approved, could bring
Zimplats’s output up to 300,000 tpa by 2010. In the long-term, Impala
envisages Zimplats producing at least 1 million ounces of platinum a
year over a 50-year life-of-mine, which would make its annual
contribution equal to the group’s flagship Rustenberg operation.
Rumble says that Zimplats is blessed with shallow resources that are
easily accessible. “The 2m-thick seam is conducive to mechanised mining
and there is an exceptionally well-skilled and educated work force in
Zimbabwe,” he notes. “Put all of this together and I think we really to
have a platform on which to pursue our long-term growth ambitions.”
Doing business in Zimbabwe is not plain sailing, as Impala has
discovered. After negotiation with the government (Rumble has met with
President Mugabe), Zimplats recently reached agreement to “release” a
portion of its mining claims – amounting to 36% of its resource base, or
51 million ounces of platinum – in exchange for a combination of
“empowerment credits” and cash.
Impala says that in return it expects to receive security of tenure in
respect of Zimplats’s long-term expansion programme, which will allow
for operations of at least 1 million ounces of platinum per year over a
Responding to concerns that the Zimbabwe government may wish to control
a greater portion of the country’s mines, Rumble replied that
empowerment doesn’t only include ownership but also social
contributions, investing in infrastructure and handing back mineral
rights to the state. All of this was negotiated in the agreement, he says.
Impala shares traded flat on Friday in Johannesburg at R1 334.50
(US$185.89) after the company reported record production at all its
operations and an increase in headline earnings of 40%. The group also
announced that it will ask shareholders to vote on a proposed 8-for-1
share split. The share is currently the most expensive on the JSE, and
the proposed split is expected to improve Impala’s liquidity.
Keith Rumble: CEO, Impala Platinum
By: Geoff Candy
Posted: '28-AUG-06 06:23' GMT © Mineweb 1997-2006
MINEWEB: Well, Keith Rumble joins us now. He is the CEO of Impala
Platinum. Pretty good results coming out – sales revenue up 40% to
R17.5bn on higher metal prices, operating profit up 73%. Keith, let’s
start with Zimplats, though, before we get on to the results of the
South African operations. You said this morning that you see it as the
group’s largest growth opportunity. How big do you see Zimplats becoming
in the group?
KEITH RUMBLE: Well, Geoff, the contained metal in the ground there is
90m or 95m ounces of platinum. So if we had to grow that from its
current level of, let’s say, 100 000 ounces to 1m ounces, we’ve got 90
years of supply. That’s our aspiration – to grow it into a million-ounce
producer, which is the same scale as our Rustenburg operations, and
that’s very feasible.
MINEWEB: You struck a deal with Government whereby basically it gets
part of your claim and you get security of tenure. You haven’t received
that yet, though?
KEITH RUMBLE: No, we have, we actually received written confirmation
from them today that the special mining-lease provisions that determine
how you manage the resources have come through. And all of the fiscal
and foreign-exchange provisions have now been incorporated into our
enlarged lease. So they have delivered on their part of the bargain.
MINEWEB: And what do you have to deliver in return?
KEITH RUMBLE: We had to hand back about a third of our resources.
KEITH RUMBLE: And those were resources we would not have exploited for
many, many years into the future.
MINEWEB: Now you are planning to spend $258m on the expansion programme
at Zimplats. You must be pretty confident that this agreement’s going to
last and that Zimbabwe as a country is going to become – or remain as
stable as it is now. What are your feelings?
KEITH RUMBLE: Well it helps to run a business that is a
hard-currency-determined business. So we’re not really open to the
vagaries of the local currency effects there, but we’ve had nothing but
a good experience in Zimbabwe. We’ve been in there for five years now,
we’ve invested steadily. They haven’t tampered with any of the
provisions in our mining licences. We’ve done, I think, a pragmatic deal
to unlock value for our shareholders, to give us the confidence to go
forward with exploiting the resource. It is the lowest technical risk
resource around. And from that perspective we think it's a good place to be.
MINEWEB: Production was relatively flat. Sales volumes were up on the
higher prices. How sustainable are these prices?
KEITH RUMBLE: How sustainable are the prices? Well, the fundamentals for
the metals are still extremely robust. You’ve got strong demand coming
through for platinum, mainly out of the diesel automotive sector. And
that’s a European story, where the European market penetration of
diesels is taking off, and I think it's going to spill over into the USA
as fuel economy becomes a bigger issue around the world with these high
fuel prices. For palladium, that’s also pretty good in that palladium
goes into gasoline vehicles, and that has increased in percentage terms
mainly because of increasing emission control standards around the
world. And then rhodium is the other third-biggest metal, and that is
also used for emission-control purposes for so-called NOx, which is the
smog that you see around the big cities around the world. It's the only
metal that can do the job in controlling that. So the fundamentals are
extremely solid. Jewellery is the swing factor. Platinum has sort of
fallen out of bed as metal prices have increased but, palladium has come
to the party. And it was necessary to give up some platinum out of the
jewellery sector to support the industrial demand. So it's a very good
elasticity that we see coming through in the industry. So fundamentals
very strong and we don’t see too much downside for prices.
MINEWEB: Moving on from that, you built Two Rivers with ARM. Are there
any other opportunities in South Africa? Your growth, you say it's
coming from Zimbabwe – are there any other mines that can be built in
KEITH RUMBLE: There certainly are. A case in point there is that our
Marula operation, which is still ramping up, has a second phase attached
to that. We’re only exploiting the UG2 reef at the moment, and we can
exploit the Marensky reef in the fullness of time. We’re doing a
feasibility on that. And the same holds for Two Rivers. The Marensky
reef is still out there to be exploited. And then there are some of the
junior properties that are being prospected as we speak, and they might
hold some interest to us.
MINEWEB: The just explain how the reefs work. There are two – the
Marensky and the UG2 overlay each other, one higher grade or higher
grades than the other. How exactly does it work? What sort of percentage
mix are you using?
KEITH RUMBLE: Well, in a mature operation like Rustenburg we actually
exploit both. And we exploit it at sort of 55% Marensky and 45% UG2.
MINEWEB: Which is the …
KEITH RUMBLE: The Marensky is the preferred reef that has nickel and
copper associated with it, and it's actually easier to process and a
slightly higher grade. So, from that perspective that’s the Rolls Royce.
MINEWEB: There was also a R159m tax charge – there seems to be a quibble
over that. Why is SARS wanting this money, and where does the problem
KEITH RUMBLE: That relates to a tax issue pertaining to the deal that we
did with the Royal Bafokeng seven or eight years ago, whereby we took a
tax deduction on an up-front payment which was treated as capital at
that point in time, and they’re disputing that. So that’s an issue.
WAYNE MCCURRIE: Keith, obviously the outlook is extremely good for
platinum prices going forward, as you mention, in demand and supply. But
given the higher interest rates in the US and possibly worldwide as
well, do you think we could have, let’s say, a two- or three-year pause
in the overall bull market and maybe some fall in the dollar price? Not
just platinum, but resources, commodities in general.
KEITH RUMBLE: I think each commodity has its own unique set of
circumstances. If you look at the base metals, they’re really been
driven by the China and India factor coming through. There’s been an
underinvestment in capacity in that’s sector for the longest time now,
and I think we’re seeing incremental demand coming on an already
stretched pipeline. so I think failing a major downturn in those two
economies. I think for base metals the outlook is still pretty positive.
For precious metals and in particular the PGMs, there the demand has
really been driven by legislative effects, emission control
legislations, and those are still tightening progressively into the
future. There’s another round of more stringent regulations coming
through in 2010. Going to be positive for demand again.
MINEWEB: Keith, on a more personal note, you are leaving Impala. Have
you got any plans yet as to what’s going to happen when you do leave?
KEITH RUMBLE: Well, I’m not going speeding off into the sunset in my
Ferrari. But no, I haven’t got any plans, my intention was always to
take a couple of months off. A lot of opportunities out there in the
resources sector. Some of them are very interesting – and who knows
where I’ll pop up.
MINEWEB: That was Keith Rumble Impala Platinum CEO.
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