Cash-flush Sibanye-Stillwater set to roll-out R6.8bn investment in SA
JOHANNESBURG - SIBANYE-STILLWATER has committed to investing R6.8 billion in three capital projects expected to create 7 000 jobs as the group posted record cash flows and strong profits during the year to the end of December 2020.
The group said yesterday that its board had approved the development of the K4 and Klipfontein projects in Rustenburg, North West, and the resumption of capital development of the Burnstone gold projects in Balfour, Mpumalanga.
Chief executive Neal Froneman said the group was, however, concerned that South Africa’s current policy and ideology continued to inhibit investment, and said there was a critical need to address investment barriers to drive an economic recovery.
“Continued policy uncertainty, combined with other risks, such as those related to the reliability of water and power availability and the uncertain outlook for electricity costs, as well as risks of social disruption and inefficient regulatory processes, are ongoing deterrents to significant investment,” Froneman said.
Froneman said the uncertainty had been apparent in previous commodity upcycles, where only projects with an extremely strong commercial case could be justified, resulting in South Africa lagging behind the rest of the world in terms of investment in and the growth of its mining sector.
Earlier this month, Minerals Council chief executive Roger Baxter said R20bn in potential investment opportunities would be available in a supportive environment, but the environment was not supportive.
“As you can see from the investments we have just declared, this number is likely to be conservative. A significant effort is going to be required to revitalise and reboot the mining industry and, with it, the national economy,” Froneman said.
He said the industry had the potential to drive much-needed growth.
“Right now, we are in a commodity super cycle, and there is a significant potential for the mining industry to contribute to the economic growth of South Africa.”
The development of K4 would entail the completion of the project, which was significantly advanced by the previous owners, Lonmin, which sunk capex of R4.4bn into the project before suspending it due to capital constraints.
Klipfontein is scheduled for development in terms of the existing “pool and share agreement” with Anglo
American Platinum at the Kroondal operations. About 4 380 jobs were expected to be created once K4 reaches steady state production, and 124 other jobs will be created at the Klipfontein project. Burnstone, which was previously operated by Great Basin Gold, is expected to ramp up over five years to a steady state production of about 130 000 ounces a year for 10 years.
The operation was expected to create 2 500 permanent jobs in an area faced with an unemployment rate exceeding 30 percent.
“The projects we have approved are among the best in the industry due to specific characteristics which enhance their attractiveness and support the investment decision,” said Froneman.
The group recorded an adjusted free cash flow of R19.9bn, 63 times more than the R318m posted in 2019.
Shareholders were rewarded with a dividend of 321 cents a share, or about R9.375bn, during the six months to the end of December 2020, and an interim dividend of 50c a share, bridging the total dividend to 371c a share.
Group revenue surged 47percent to R72.3bn ($4.43bn), mainly due to higher commodity prices partially offset by lower sales volumes at the South African operations.
Profit attributable to the owners of Sibanye-Stillwater increased to R29.3bn from R62m in 2019.
Sibanye-Stillwater’s shares declined 0.86 percent to close at R68.80 on the JSE yesterday.