Time for a new challenge – Impala Platinum CEO

David Brown’s resignation as CEO of Impala Platinum surprised the market on Wednesday, knocking roughly R2.5bn off the company’s market cap.

Brown, who will remain as CEO until June 30th, brushed off any connection between his departure and the continuing discussions between Impala and the Zimbabwean government over new indigenisation laws, saying, that he had begun the conversation with his chairman a few months ago.

“I will have been an executive director for almost 14 years by the time I complete my task at the end of June. And, it is probably time for me to look at other opportunities and challenges out in the market place.”

Cadiz Corporate Solutions mining analyst, Peter Major said the announcement came as a surprise to him because the secret had been well kept. “Because no one leaked it, I think everyone assumed the worst.” But, he says, the reasons for leaving are understandable, “it is a very tough job, it burns you out.”

Asked why the announcement was made before a successor had been completely secured, Brown said that the deal made with the group was that the announcement would be made as soon as the discussions around the timing of his departure had been made. But, he added Impala was also trying to telegraph the change as best it could to the market.

Speaking on SAFM’s Market Update with Moneyweb, Brown said, “I am only leaving in five and a half months time so certainly there is a long way to go before I depart from Implats. I certainly believe that work is underway as we speak now and I certainly believe that that announcement will be made in very short amount of time. That would allow for some period of overlap, between the incoming and outgoing. ”

Whoever the incoming CEO is, they will walk into a rather challenging environment. On the demand side, platinum prices have been trading consistently lower than gold in recent months, weighed down by concerns about growth in Europe (see Platinum price looking cheap but Europe still with swing vote)

And, on the supply side, a number of safety-related stoppages have meant overall production in South Africa take a knock. And, the expectations for 2012 don’t look much better.

For Impala Platinum specifically, the ongoing challenge will relate to its operations in Zimbabwe: Zimplats and Mimosa.

In recent months, the country has made increasingly loud moves to ensure it benefits from the metal being extracted. The most recent example in Impala’s case came earlier this month when the Zimbabwean government instructed bankers for Impala Platinum’s local unit Zimplats to pay $28.3 million in outstanding royalty payments.

According to Brown, however, negotiations with the country remain positive. ” I think, while there might  be a perception of deterioration in the media, from our perspective, we have submitted both our indigenisation plans for both Mimosa and Zimplats to the government of that country. We are having detailed discussions on the technical level around those submissions.”

And he says, “I certainly believe in the last three months we have had a lot more traction in those debates than we had previously. So I think maybe, contrary to what one might see in the press we are making progress in that regard.”

Major, was also complementary of Brown’s efforts in the country, saying “no one could have done better in Zimbabwe than Dave”.

“He has not done a bad job. I think, relative to the JSE All Share index, Impala doesn’t look good, but it has never been higher relative to the platinum index, it has only been higher relative to Amplats, its biggest competitor, once. So he has really outperformed all of his peers.”

The Future

Asked what his future plans are, Brown says he is still very focused on Implats and will be for the next 5 and a half months.

“I have the interim results for the company in about 3 weeks time and that is the focal point for the moment. And there is still work to do in Zimbabwe so that will also be a focal point. but sometime over the next 6 months I will look through the options available and make a decision.

As for the mining industry, Brown says it is one he finds both challenging and exciting and, he says, if given the opportunity, “I might stay in mining”. – Mineweb

Tags: Impala Platinum

Posted by admin on Jan 20 2012. Filed under Platinum. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry