Operational Review

 

Impala Refining Services

 

Business summary

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

 

 

Operational review

Impala Refining Services (IRS) utilises Impala Platinum’s excess processing and refining capacity to smelt and refine the concentrate and matte produced by the Group’s other operations and third parties. The business also comprises the recycling of autocatalysts/catalysts and ad hoc toll refining.

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

Refined platinum production from mine-to-market operations, increased by 8% to 487 000 ounces. This was primarily due to the first full year of steady state production at Zimplats following the completion of the Phase 1 expansion.

Mine-to-market
(000oz)  FY  
2011  
FY  
2010  
Zimplats   175   154  
Marula   71   68  
Mimosa   99   94  
Two Rivers   142   135  
   487   451  

Third-party purchase contracts primarily include offtake agreements with Aquarius Platinum, Eastern Platinum and Platinum Australia. Despite Blue Ridge being placed on care and maintenance for redevelopment in August 2010, and the closure of Number One Shaft at Marikana in October 2010, production from Aquarius Platinum increased by 8% year-on-year following the restart of Everest which delivered 46 000 ounces of platinum. This increase was, however, more than offset by reduced deliveries from other third party contracts. Although recycling and toll treatment increased by 8%, production for FY2011 declined by 3% to 408 000 ounces of platinum.

 

Third-party purchases, recycling and toll  

(000oz)  FY  
2011  
FY  
2010  
Aquarius Platinum   81   75  
Eastern Platinum   62   62  
Other purchases   16   51  
Recycling and toll   249   231  
   408   419  

Overall IRS refined platinum production increased by 3% to 895 000 ounces.

Outlook

Growth in the medium to longer term is expected to come from the completion of the Phase 2 expansion at Zimplats, the continued ramp-up at Everest and Smokey Hills as well as additional output from Eastern Platinum and growing autocatalyst deliveries.

IRS – key statistics  

      FY2011   FY2010  
REVENUE   (Rm)  14 273   11 069  
Platinum      8 104   6 661  
Palladium      2 169   1 227  
Rhodium      1 376   1 242  
Nickel      1 305   1 024  
Other metal sales     874   583  
Treatment income      445   332  
COST OF SALES    (12 830)  (9 881) 
Metals purchased      (12 649)  (10 470) 
Smelting      (232)  (190) 
Refining      (366)  (318) 
Change in inventory      417   1 097  
GROSS PROFIT IRS    1 443   1 188  
Metals purchased – adjustment on metal prices and exchange     (20)  –  
Inventory – adjustment on metal prices and exchange     (4)  –  
Gross profit in Implats Group     1 419   1 188  
Other operating expenses     (30)  (29) 
PROFIT FROM OPERATIONS   1 389   1 159  
Metals purchased – fair value adjustment on metal prices     (123)  –  
Metals purchased – foreign exchange adjustment     143   –  
Gross margin   (%)  10.1   10.7  
SALES   (Rm)  14 273   11 069  
Direct sales to customers     401   383  
Sales to Impala     13 427   10 354  
Toll income     445   332  
TOTAL SALES VOLUMES       
Platinum   (000oz)  684.2   615.4  
Palladium      474.2   434.3  
Rhodium      87.1   79.6  
Nickel   (t)  7 863   7 117  
PRICES ACHIEVED       
Platinum   ($/oz)  1 691   1 432  
Palladium      655   374  
Rhodium      2 254   2 065  
Nickel   ($/t)  23 757   19 031  
EXCHANGE RATE ACHIEVED (R/$)  7.00   7.56  
REFINED PRODUCTION       
Platinum   (000oz)  895.1   870.0  
Palladium     680.6   778.7  
Rhodium     134.8   130.5  
Nickel   (t)  10 829   10 314  
PGM refined   (000oz)  1 918.2   1 974.7  
METAL RETURNED      
Platinum   (000oz)  219.5   233.0  
Palladium     210.0   259.3  
Rhodium     41.7   49.3  
Nickel   (t)  3 370   2 792