Sibanye-Stillwater, which is shedding off thousands of jobs at its South African platinum and gold projects, says it is in a strong financial position for the quarter to the end of September, having bought off an Australian mine for $10 million (R189m), as it pursues strategic restructuring to survive the ongoing commodity downturn.
Adjusted group Ebitda for the September quarter at R3.027 billion was, however, lower compared to R8.4bn in the previous contrasting quarter.
Sibanye-Stillwater said last month that a restructuring exercise at its South African platinum group metal operations could result in losses of more than 4000 jobs.
Sibanye-Stillwater, which has platinum group metals (PGM), gold and nickel operations in Africa, America and Europe, says it is “moving down industry cost curve” as global metal prices weaken.
Sibanye-Stillwater has just bought the Tasmania copper mine in Australia.
Shares in Sibanye-Stillwater softened 2.42% on the JSE yesterday to R22.61.
The company is also diversifying into lithium, after buying the Keliber project in Finland where it has “initiated the construction of the lithium concentrator” and development of the Syväjärvi open pit mine.
“The global macro-economic environment remains challenging. Our financial position remains robust and our capital allocation framework remains the guiding principle for growth and diversification opportunities aligned with our strategy,” Sibanye-Stillwater CEO Neal Froneman said yesterday.
During the September quarter period under review, gold production from Sibanye-Stillwater’s South African gold operations, including DRDGold, sagged 3% to about 6.1 tonnes on account of two fire incidences at Driefontein and at the Kloof 4 Shaft. The closure of the Beatrix 4 shaft at the end of 2022 also had an impact, the company said.
The lower gold output coincided with a 2% uptick in all in-sustaining costs for gold production which amounted to R1232600 per kilogram of bullion compared to the same period last year. Capital expenditure for the period, excluding that for DRDGold was, however, up by 9% at R1.3bn as the operations recovered from the strike and lock-out incident.
At the troubled South African platinum group metals operations that are set to cull thousands of jobs, Sibanye-Stillwater instituted “cost management” that stood out as “a key differentiator” across the industry.
In spite of lower prices, rising costs pushed up by inflation and other pressures, the South African PGM operations raised production by 4% to 451 560 4E ounces.
This has been attributed to improved production from the Rustenburg and Marikana operations, which offset lower production from the Kroondal operation as a consequence of the planned closure of the Simunye shaft last year.
There were no ore stockpiles for the period, a significant improvement from the 2022 September quarter that had 33 000 ounces of ore stock piles as a result of elevated levels of power curtailment by Eskom.
Even though the South African PGM operations had higher output, Froneman said four shafts had become unprofitable as PGM prices tumble, prompting the restructuring exercise. The company did put some capital into the operations, forking out about R1.4bn, which was 14% higher than the previous contrasting period.
About R64 million was invested during the period under review into a new chrome extraction plant at the Platinum Mile project that Sibanye-Stillwater will commission in the last quarter of the current year.
The company’s US PGM operations are set to be restructured further as a consequence of a worsening medium term outlook for palladium prices. The decline in the palladium price so far in 2023 “has surpassed our expectations” after “dropping lower and faster” than anticipated.
Production from the US PGM operation was, however, 23% higher at 105546 ounces compared to the same quarter in 2022, which was impacted by flooding in Montana. The flooding had restricted access to the Stillwater mine leading to the suspension of production from the Stillwater West and East mines for eight weeks during quarter three 2022.