RESOURCES behemoth Zimplats Holdings has initiated a voluntary layoff exercise for all employees to keep the company afloat in the low-price metal market.
Metal prices have been on a downward trend since April 2023 and remain depressed to date. The metal prices have decreased by up to 35% during this period and this has had a negative impact on cash flow and profitability.
Zimplats chief executive officer Alex Mhembere revealed in a statement that if successful, the exercise will mitigate the need for a compulsory retrenchment.
“We have been communicating through our usual platforms about the difficult operating environment that we face. PGM (platinum group metals) prices remain very weak and this situation is projected to last for the next 12 to 18 months,” he said.
“We have been working with all teams across the board in implementing various cost containment and cash preservation programmes. I wish to thank all team members for diligently rallying behind our efforts in this regard.
“I am confident that as a team we will successfully navigate through the headwinds. While our cost containment and cash preservation programmes yield expected results, the company’s situation remains difficult and, therefore, additional measures still need to be undertaken.
“One of the measures that the company will implement is a voluntary retrenchment exercise for all employees wishing to be considered. If successful, this will mitigate the need for a compulsory retrenchment.”
Mhembere said the management reserves the right to approve or decline any application based on business requirements and this is not subject to an appeal process.
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The voluntary retrenchment package includes two week’s pay for every completed year of service, one-month notice pay and minimum guaranteed package of three months for employees whose retrenchment package is less than three months.
All statutory requirements will be paid out together with the package.
“Approved applicants will receive a voluntary retrenchment agreement detailing the terms and conditions of the retrenchment, including all payments due. Employees who proceed on voluntary retrenchment will be considered good leavers and will be eligible for re-employment in future whenever suitable new opportunities arise,” he said.
Another platinum miner, Mimosa early this month embarked on a similar programme, targeting 33 managerial and supervisory employees.
It said the outlook for metal prices will remain depressed in the medium term and in view of this, the company had to implement several measures to ensure that the business remains viable.
The measures included capital expenditure curtailment, cost reduction, cash conservation initiatives as well as staff rationalisation.
Anglo American Platinum, which operates Unki Mine in Zimbabwe, has also revealed plans to cut 3 700 jobs and review the contracts of 620 suppliers across its businesses. It, however, said the Zimbabwe operation will be shielded from the full impact of planned job cuts across the group because it is one of its top performers.
Zimplats suffered a 32% decline in revenue for the period ended December 31, 2023 compared to the prior period due to the softening metal prices. Gross revenue per platinum, palladium, rhodium, gold, ruthenium and iridium (6E) ounce sold declined by 38% to US$1 164.
The group, however, experienced a 10% increase in sales volumes of 6E ounces to 320 196 ounces compared to 291 751 in the prior period.
The cost of sales at US$342 million was 8% higher than the same period last year’s US$315,6 million. Consequently, the gross profit margin was 8%, a 34% reduction from 42% achieved in the same period last year mainly due to the impact of higher than budget operating cost per 6E ounce in the current period.
The group’s operating costs increased by 1% owing to local inflation and an increase in labour headcount due to the introduction of the Third Concentrator plant and pillar reclamation.
