Imraan Osman: Siyanda Resources is a turtle in a hare race

post-title

Despite being smaller than most of its peers in the PGM industry, Siyanda is miles ahead.

Imraan Osman joined the workforce at a very young age, running market stalls after school and on the weekends. Because of this early exposure, he learned how to work with money and how to run a business before most kids knew what they wanted to do for a living.

With a knack and a passion for business and finance, Imraan qualified as a chartered accountant and entered the corporate world of work. After his articles, he joined the mining industry as a senior financial accountant at Anglo Platinum (Amplats), where he spent a further 13 years working in various other roles within the organisation.

During his time at Amplats, the company adopted a strategy to shift away from deep level underground mining, and two assets were earmarked for potential exit. Union Mine went onto the market first, but as a loss-making business, received no interest from potential buyers. Rustenburg Mine was put up for sale shortly after and was acquired by Sibanye Stillwater.

On the back of a successful Visionary CFO Series in 2021 and 2022, A2X has once again partnered with CFO South Africa to bring you a series of interviews highlighting South Africa’s best and brightest CFOs, their insights and challenges. Find out how they help lead some of South Africa’s most successful companies in this bi-weekly interview series.

Read all about the Visionary CFOs here.

Seeing potential in Union Mine
In 2016, Imraan decided it was time for a career change and joined Siyanda Resources as a director of business development and corporate finance.

Siyanda was looking to grow into platinum group metals (PGMs) at the time, and Imraan was tasked with exploring the Union Mine valuation proposition with a view of acquiring the asset from Amplats. Having had exposure to Amplats’s Union Mine, which was still in the market at that stage, he saw potential in the asset and pursued a sale process with Amplats for the acquisition of this asset.

“The team within Siyanda is predominantly ex-Amplats employees, many of whom also worked at the Union Mine. So we started looking at this asset and saw so much potential if we just did things a little bit differently,” he says. Imraan believed that being a relatively small and agile mining group in comparison to Amplats, Siyanda could quickly unlock the potential value that they saw in the asset and return the mine to profitability.

When the offer to purchase was accepted, Imraan’s role within Siyanda was extended to include CFO for the PGM business. The hard work then started to raise capital and develop a turnaround strategy for the mine. “It was at a time where commodities markets were not performing well and access to capital markets were limited, especially to fund an underperforming asset,” Imraan explains.

Nonetheless, he managed to raise the capital and turned his focus to deploying a turnaround strategy enabling Union Mine to return to profitability.

Shifting the mindset
The first thing Siyanda had to do was change the mindset of the employees, who had become despondent after a prolonged period of uncertainty. “When an asset is up for sale for an extended period of time, it affects the mind of its employees, because they don’t know what the future holds,” Imraan says.

He adds that the employees’ were further concerned by the fact that Siyanda was so much smaller than Amplats, and they couldn’t see how a junior operator could restore the mine’s value when a conglomerate couldn’t.

“As much as we needed to put money into the things that mattered for the mine, like capital development and equipment, we had to focus on renewing the energy and purpose of our employees’ first. In addition to various employee intervention and culture change programs, we started putting money into the things that mattered to the workers, like improving the housing, rehabilitating the recreational centre and the golf club, and introducing various social clubs,” Imraan explains.

Siyanda also brought in old hands who used to work on the asset in its prime and understood the true potential of it. “They would come in and share their stories of how well the mine had performed and how well the environment was 20 years ago, which created a renewed energy to bring Union Mine back to what it had been before.”

He adds that the mindset started shifting and what the workforce thought was impossible, all of a sudden seemed achievable.

In parallel, extensive work was underway to capitalise the underground working areas, and switch out expensive systems and processes to create a sustainable entity that could stand on its own. “We wanted to create a business that could be resilient through commodity cycles and macroeconomic volatility that ultimately affects profitability.”

A year after the acquisition, Union mine broke even and has made increasing profits ever since.

Imraan explains that, in the last two years, high commodity prices have helped Siyanda grow and improve Union Mine. “Commodity cycles always have ebbs and flows, so we know that at some stage in the future we will find softer prices in the markets. Having acquired an asset that was largely undercapitalised, we wanted to make sure it was fighting fit for when that time came, and the only way to do that was to continue investing capital into Union Mine.”

Ahead of its peers
While commodity markets were favourable over the last two years, Covid-19 and the subsequent working environments were not. During the initial hard lockdown of South Africa, all businesses had to stop operating immediately, impacting their financial performance and production outputs. And the mines were no exception.

However, four weeks into the lockdown, mining was deemed an essential service and operations could start again albeit at a 50 percent capacity.

“We were arguably one of the fastest mines to get back into production, thereby limiting losses,” Imraan says. “One of the competitive advantages we had as a smaller single asset entity was that we were nimble enough to get back the critical skills we required almost immediately.”

He explains that, while the rest of the industry was out eight to 10 percent in terms of production during the pandemic, Siyanda was only out by six to seven percent because of its quick return time.

Additionally, in 2021, when vaccination rollouts began, Siyanda ranked second in the mining industry, and first in the PGM industry in terms of employees vaccinated.

This was not the first time that Siyanda was ahead of its conglomerate peers in the mining industry, Imraan explains. “Three years ago, we were the first mine to sign off wage agreements, long before the rest of the industry.”

Now Siyanda is claiming another first, having just signed a five-year wage agreement with both unions. “In this particular industry, wage agreements get very contentious,” Imraan says. “When we sat down three years ago, we said we couldn’t afford a strike because everyone would lose financially and we would also lose our credibility with our people .”

He adds that, once a mine loses its credibility, it’s almost impossible to get it back.

“Our wage negotiations were supposed to be in June with the rest of the industry, but we started talking to our employees and organised labour in November of the previous year.”

Having attained their primary goal of restoring the business to profitability and claiming its space amongst the majors within the industry, Siyanda has now turned its focus to expanding the life of the Union Mine shafts to 20 more years of operation. In addition, the business is equally driving its ESG agenda in the form of implementing projects to generate and consume its own renewable energy going forward.

Related articles

CFO Jan Hofmeyr shares his blueprint for technological transformation

Passionate about the opportunity technology can bring, 2023 Finance & Technology Award winner Jan Hofmeyr has been breaking the CFO mould at OUTsurance by driving the transformation of its finance department so it remains relevant in an increasingly digital future. He reveals how this change has affected the entire business.

Top