JOHANNESBURG (miningweekly.com) – Impala Platinum (Implats) CEO Terence Goodlace described the lack of mining-face availability and ore reserve flexibility at its Rustenburg lease area as “woeful” during the recent interim period and said it had driven the company’s weakened production performance.

The company reported a 10% in tons milled increase at Rustenburg to 6.18-million, while refined  platinum production slumped by 25% to 368 000 oz – a figure exacerbated by a 22 000 oz pipeline lockup.

Overall, gross refined platinum production increased by 2% to 865 000 oz period-on-period, but mine-to-market output declined by 16% to 621 000 oz of platinum primarily owing to the lower volumes at Impala Rustenburg.

Over the past three-and-a-half years, off-reef development had increased by 26%, while on-reef development had slumped by the same margin.

The result was that Rustenburg now mined some 21% less face than it had in 2009.

“The most disappointing feature of the last six months is that we have seen less of the Merensky and UG2 reefs. If you don’t have the face, you can’t get the volumes,” Goodlace lamented during the company’s interim results presentation on Wednesday.

An urgent intervention was now being pursued to counter the receding reef-face access, which Goodlace hoped would improve the UG2/Merensky reef turnaround from its current 40:60 ratio to the long-term goal of 50:50.

He said that lower efficiencies were achieved as a result of spare panels on both reef horizons, which was exacerbated by panel stoppages as a result of geology requiring high rates of development.

“Our development rates are in excess of 60 km a year. The only way out of this is to move as fast as we can to the new shafts, where the extraction rates are higher.”

Implats marketing executive Derek Engelbrecht added that industry-wide cost pressures and disruptions had further eroded margins over the period while prices had remained flat.

He said that, over the last five to six years, mining inflation had pushed electricity prices up by 238%, while fuel and wages had risen by about 60%. As a result, the average cost per platinum ounce had grown by 18% a year.

“The status quo in the industry is simply unsustainable,” he said.

Goodlace added that the South African operating environment, which was dominated by changing labour dynamics, increasing stakeholder expectations and cost pressures would continue to squeeze margins.

But the company would consult organised labour with a view to communicating the profit challenges facing the group and to define the role that labour could play in improving profitability and safety, he said.

This followed the disclosure that the National Union of Mineworkers had been officially derecognised at the Rustenburg mine, after emerging union the Association of Mineworkers and Construction Union secured a 50% representation rate.

“We have officially handed out the new recognition agreements with an aim to involve all stakeholders in the future dispensation and create a new, safe working environment at Impala,” Goodlace emphasised.