Zimplats, the largest producer of platinum group metals (PGMs) in Zimbabwe, is under financial strain due to a significant decline in global platinum prices. To address this challenge, the company is offering voluntary redundancy packages to its employees as a cost-cutting measure.
The price of platinum, a crucial component in catalytic converters used to reduce emissions in automobiles, has experienced a sharp drop since April 2023. From trading at around US$1,316 during that time, the price has fallen to US$899.70 as of yesterday afternoon (local time).
The primary reason for this decline is attributed to weaker economic growth in China, which has had a notable impact on producers and the overall platinum market.
Zimplats foresees that the weak prices of platinum group metals will persist for the next 12 to 18 months, necessitating further cost-cutting measures for the company.
In a staff circular dated March 18, CEO Alex Mhembere announced the initiation of a voluntary retrenchment exercise for employees who wish to participate. The program aims to mitigate the need for compulsory layoffs.
While the company's cost containment and cash preservation initiatives have yielded expected results, Zimplats still faces a challenging situation and therefore requires additional measures, as stated by Mhembere.
The latest financial results of Zimplats reflect the difficult market conditions. The company reported a post-tax loss of US$8.8 million, a significant decline compared to the US$159.6 million profit recorded in the previous period. This represents an unprecedented 105 percent drop in earnings and marks the first loss suffered by Zimplats in nearly a decade.
Employees of Zimplats have until Friday to submit their applications for the voluntary redundancy program, which offers a severance package equivalent to a minimum of three months' pay.
Mhembere expressed confidence in successfully navigating through the challenges, emphasizing the collaborative efforts of the team in implementing various cost containment and cash preservation initiatives.
Zimplats is not the only company facing these difficulties, as the global PGM producers are undergoing a wave of retrenchments. Zimplats' parent company, Impala Platinum, has already implemented substantial job cuts in South Africa, which accounts for approximately 70 percent of the world's platinum output.
