Sibanye-Stillwater, a major player in the global precious metals industry, announces plans to restructure its South African gold operations, potentially leading to the loss of 4,022 jobs. This move follows operational challenges and aims to enhance efficiency and sustainability.
The restructuring initiative targets four gold operations in South Africa, with the proposed layoffs affecting 3,107 employees and 915 contractors. Sibanye-Stillwater, listed on both the Johannesburg Stock Exchange (JSE: SSW) and the New York Stock Exchange (NYSE: SBSW), currently maintains a global workforce of over 84,000 employees across South Africa and the United States.
Operational difficulties at Sibanye-Stillwater’s Beatrix 1 shaft and the closure of Kloof 4 in the previous year have contributed to the need for restructuring. Insufficient ore supply to the Kloof 2 plant further exacerbates the situation, prompting a comprehensive review of the company’s gold mining operations in South Africa initiated in October.
As a result of the restructuring, the company anticipates a decrease in gold production for the current year, with projections ranging from 627,000 to 659,000 ounces, excluding tailings reclamation projects managed by its DRDGold unit. BMO Capital Markets forecasts gold production of around 625,000 ounces, with an all-in sustaining cost (AISC) ranging from US$1,955 to US$2,133 per ounce.
BMO mining analyst Raj Ray acknowledges the potential for improved margins in Sibanye-Stillwater’s gold portfolio despite the production decline. The restructuring aligns with the company’s strategic goals, particularly given the previously announced capital deferral at Burnstone.
At Beatrix, operations face additional challenges, with the No. 4 shaft placed on care and maintenance while mining activities predominantly concentrate on the No. 3 and No. 1 shafts. With the life-of-mine plan ending in 2026 and limited reserve extension opportunities, Beatrix produced 136,000 ounces of gold last year, accounting for approximately 21% of the country’s total gold output, excluding DRDGold.
Sibanye-Stillwater’s CEO, Neal Froneman, emphasizes the company’s commitment to responsible corporate practices, pledging to engage constructively with affected employees and their representatives to minimize job losses and mitigate socio-economic impacts. The restructuring efforts extend beyond the South African gold operations, encompassing cost-cutting measures across all platinum group metal (PGM) operations, including those in the United States. The decline in prices of key PGMs, such as platinum and palladium, coupled with operational challenges, has necessitated strategic adjustments to ensure long-term sustainability.
Despite these challenges, Sibanye-Stillwater remains proactive in strengthening its financial position. Recent discussions indicate the company’s intention to raise approximately $500 million through prepayment arrangements, such as metals streaming, to bolster its cash reserves. Shares in Sibanye-Stillwater experienced a 2% decline in Johannesburg trading on Thursday, reflecting investor sentiment amid the restructuring announcement. The company’s market value stands at 71.2 billion rand, with shares trading within a 52-week range of 17.56 rand to 45.78 rand.
