March 28 (Bloomberg) -- Impala Platinum Holdings Ltd. is considering the mechanization of its Leeuwkop project in South Africa as a more profitable option that would support output goals set by the world’s second-biggest producer of the metal.
When the company bought African Platinum Plc and acquired Leeuwkop in 2007, a labor-intensive approach was considered for the prospect, said Johan Theron, an Impala spokesman. The current design for the project that will cost as much as 12 billion rand ($1.2 billion) is for 145,000 ounces of annual platinum output.
“As we’re going through the project today, mechanization is the preferred option,” Theron said by phone today. Lower labor costs, along with productivity and safety, are some of the advantages of mechanization, Theron said.
A two-month strike by more than 70,000 members of the Association of Mineworkers and Construction Union at most South African operations of the world’s three largest platinum producers has cost the companies 10.5 billion rand in revenue.
The AMCU wants pay for entry-level workers to more than double to 12,500 rand a month in four years. Employers have offered increases of as much as 9 percent, compared with South Africa’s inflation rate of 5.9 percent as of February.
The strike is “going to push the urgency and the timeline to change” to mechanization, Theron said.
The Leeuwkop project would require about 3,000 higher-paid employees and reach production in about half the time if it were mechanized compared with 10,000 for a labor-intensive plan, according to Theron. It will cost about 10 billion rand to 12 billion rand, take 10 years to develop and require at least two more years to reach production if mechanized, he said.
A decision on Leeuwkop is expected in about three years after trial engineering, Theron said.
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