KEY POINTS
- Sibanye Stillwater will reduce palladium and platinum production by 200,000 oz/y due to declining PGM prices.
- The restructuring will downsize the US workforce and cut costs to improve profitability.
- Despite losses, the company strengthened its balance sheet and maintained a strong financial position.
On the 12th of Sept., the CEO of Sibanye Stillwater, Neal Froneman announced the restructuring of the company’s PGM operations and 200,000 oz/y reduction in palladium and platinum production to cut costs. This restructuring is as a result of the decline in the prices of platinum group metals (PGM).
This move would also be downsizing the workforce of the group’s US operations. Neal also noted in a report that the company’s financial results ended on the 30th of June.
Financial impact and challenges
In spite of the positive production outcomes from the former restructuring of the US operations, the PGM price has remained stagnant at $300/oz to $400/oz which are below the average all-in sustaining costs. The group reported that it is not possible to reduce unit costs to achieve profitability without increasing the money invested in production growth.
According to a report by Mining Weekly, the capital investment needed for production growth is currently not feasible because of the declined PGM prices. The restructuring is also going to reduce cash outflows, while still ensuring that the Columbus autocatalyst recycling is sustainable.
Sibanye will also work on reviewing the mine operations to reduce AISC to $1,000/oz. The company reported a huge loss of R7.1 billion ($ 379 million) for the first half of 2024. The result for the first half of 2023 is in sharp contrast, as the company saw a profit of R7.79 billion ($ 427 million).
Positive outlook amid losses
In spite of these losses, Neal emphasized that the group had increased the strength of its balance sheet and liquidity by R25 billion ($ 1.4 billion). He further added that Sibanye maintained a strong financial position with 1.43x net debt.
The group hopes to start reaping the benefit of restructuring the South African gold operations and central services from the second half of the year. The region has delivered solid performance by increasing production and producing positive free cash flow.
The platinum, palladium, rhodium and gold PGM basket prices led to a 4% production increase of 828, 460 ox, while the cash flow was R849 million.
The CEO emphasised the group’s commitment to sustainability and transformation
