JOHANNESBURG (miningweekly.com) – The underperforming Marula platinum mine may be closed if it fails to return to operational profitability, Impala Platinum (Implats) CEO David Brown said on Thursday.

Delivering 45% lower gross Implats profits of R9,8-billion, Brown said that the year ahead remained challenging for Marula, located on the eastern limb of the Bushveld Complex in South Africa's Limpopo province.

Marula had a difficult year, characterised, Implats said, by reduced productivity and persistent labour issues.

"It's imperative that the operation achieves its production targets," Brown said of the rhodium-price-dependent operation that is losing money and which has been the site of slower-than-expected ramp-up in production and safety stoppages.

In reply to a question from mining analyst Nic Dinham, Brown said that a detailed review of Marula was taking place under new management and the results of that review could be anticipated in November.

"Quite clearly, we'll be setting ourselves targets to make sure that the mine is at least breaking even, or is restored to profitability.

"Marula is, unfortunately, somewhat subject to the rhodium price, other metal prices and the rand/dollar exchange rate.

"From a group perspective, Marula is still net positive at this stage, because we have the Impala Refining Services contract for Marula. but we want to make sure that it is profitable at operational level as well.

"We will be able to come back early next year to tell the market where we are with Marula, but I think the obvious is quite clear: if Marula doesn't meet its set targets and fails to return to profitability, then we will have to look at closure for that mine," Brown said.

Implats owns 73% of Marula, with Mmakau Mining, a black-owned company headed by Bridgette Radebe, a community-based trust and local Limpopo business interests owning the remaining 27%.

Loans obtained from Standard Bank by black economic-empowerment partners for purchasing 27% of Marula amount to R710-million.

A spokesperson for Mmakau said that he was well aware of the situation at Marula, and declined to comment further.

Brown said that, although the tons milled at Marula had increased by 8% to 1,57-million in the 12 months to June 30, this was well short of what had been planned, owing to limited mining flexibility, strikes and accidents.

The ramp-up of the new mining plan, in which R398-million capital had been invested, remained behind schedule.

While Marula produced 73 000 oz in the year, its net costs rose by 30% to R11 730 a platinum ounce in concentrate, owing to the high inflationary environment and lower-than-planned throughput.

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