platinum bars

There has been a R8 billion sale of business between subsidiaries of Implats: Impala Refining Services and Impala Platinum.

Impala Platinum (Impala) conducts mining operations, operates a smelting plant near Phokeng, Rustenburg and a refinery for base and precious metals in Springs.

Impala Refining Services (IRS) does not own or operate any processing and/or refining assets, but has agreements in place with Impala to process material acquired by IRS under contract through their processing and refining facilities.

IRS’ principal business comprised the acquisition of platinum group metals for the extraction and refining into deliverable products through a combination of metal purchase and toll refining agreements.

In the furtherance of its business, IRS held a beneficiation licence in terms of the Precious Metals Act, No 37 of 2005 (the PMA), which governs the acquisition, possession, smelting, refining, beneficiation, use and disposal of precious metals in South Africa, as well as an import permit to procure unwrought precious metals from its international customers.

During 2007 IRS engaged extensively with the Department of Minerals and Energy to obtain an understanding of the licences for which Impala Refining Services should apply in terms of the PMA, as it does not own or operate any precious metal mining, processing or refining assets.

It was agreed with the Regulator that IRS should obtain a Precious Metals Beneficiation Licence for its toll contracting business.

The Regulator informed IRS during 2016 that it would need to replace its Precious Metals Beneficiation Licence with a Precious Metals Refining Licence.

The requirements for the submission and approval of a Precious Metals Refining Licence application include inter alia compliance with the Mining Charter.

Impala Refining Services unsuccessfully applied for a Precious Metals Refining License in December 2016 under the prevailing operating model where Impala Refining Services utilised Impala’s facilities, which company operates with a fully compliant Precious Metals Refining License.

Following extensive consultation, it was agreed that the most efficient manner in which Impala Refining Services could commercially meet the requirements to obtain a Precious Metals Refining Licence, given its unique operating model, was to become a fully integrated division of Impala, which already processes all the material acquired by Impala Refining Services and conducts most of the regulatory and administrative duties required in terms of the PMA.

Not securing the required regulatory approvals would preclude Impala Refining Services from continuing to conduct its business as it would not be able to secure the necessary permits to purchase material containing precious metals from its customers.

The benefits of Impala Refining Services becoming a division of Impala include:

  • Securing IRS business tenure through the Precious Metals Refining Licence held by Impala, subject to compliance to the terms and conditions of the PMA (including the Mining Charter requirements)
  • Simplifying the corporate structure and ongoing toll refining business model by combining IRS’ contract administration function and the processing/refining function through Impala’s facilities under the same corporate entity
  • The transaction does not have any adverse tax consequences for either IRS or Impala and will ensure efficient administration as IRS is currently administered by Impala
  • IRS, as a division of Impala, is likely to benefit from the net Value‐Added tax and income tax position of Impala thereafter