Johannesburg, South Africa — MININGREVIEW.COM — 27 February 2009 – Impala Platinum Holdings Limited – the world’s second-largest producer of the metal – is not concerned by the Fitch Ratings decision to lower the company’s outlook from stable to negative.
“The main reason for the decision is what is happening in the motor vehicle industry, and not the company,” finance director Dawn Earp said in a mobile phone interview with Bloomberg News. “It really just means we’re on watch,” she said, adding that the downgrade was not as bad as what had happened to other companies.
About 60% of all platinum is used in auto-catalysts, according to Johnson Matthey Plc, which makes the devices. The global recession has crippled vehicle sales, propelling Toyot Motor Corporation – the world’s largest carmaker – toward its first operating loss in 71 years. The crisis has also forced General Motors Corporation and Chrysler LLC to seek government aid.
The negative outlook reflects Impala’s significant exposure to the deteriorating vehicle manufacturing industry, as well as falling platinum and palladium demand,” Fitch said in a statement. Last week, Impala said it would cut spending on new projects by a third and reduce output targets, after the price of the metal tumbled from a record last year.
The company is seeking to retain cash, suspending a share buyback programme in November and abandoning plans to take over Mvelaphanda Resources Limited and Northam Platinum Limited, after platinum prices tumbled 55% in the second half of 2008. Rising credit costs have skewered other mining deals, including Xstrata Plc’s plan to take over Lonmin Plc.
Fitch said it would continue to monitor Impala’s attempts to preserve cash. The ratings agency said it expected Impala’s sales to fall as much as 40% this year.