Sibanye-Stillwater aims to reduce its dependence on Eskom, CEO Neal Froneman said, as the mining firm posted its annual results, which saw its net profit for 2022 nearly halve.
“We are working toward solutions, companies are driving renewable energy projects primarily to reduce their carbon footprint, but of course, it will make them less dependent on Eskom.
“The problem with renewable energy is that it's not a baseload. We are looking at some baseload projects, and once we've got more definitions around those, we will share them,” he said.
In its results for the six months and year ended December 31, 2022, the diversified metal group posted a 43.7% decline in profit year-on-year of R19 billion.
The group declared a final dividend of R1.22 a share, down 35% from R1.87 a share in 2021.
Sibanye’s shares closed 2.96% lower at R7.11 on the JSE.
Its performance was negatively affected by a three-month strike at its South African gold mines, a one-in-200-year flood at its Montana operations in the US, inflation, and other macroeconomic headwinds.
Sibanye reported that headline earnings per share were 40 cents compared with 86 cents in 2021 and guidance of between 38 cents and 42 cents was provided last week.
The miner reported a group adjusted Ebitda of R41.1bn for 2022 , which was 40% lower than the record-adjusted Ebitda of R68.6bn for 2021, but still, the third-highest group adjusted Ebitda recorded since listing.
“This was despite the SA gold operations recording an R3.5 billion ($219 million) adjusted Ebitda loss and the adjusted Ebitda contribution from the US PGM (platinum group metal) underground operations declining by 47% to $386m (R6.3bn),” the group said.
Froneman said the 2022 results also reflected more specific incidents, which were partly within Sibanye’s control such as the three-month industrial action and lockout at the South African gold operations, which was necessary to ensure the sustainability of the local operations and protect the rights of other stakeholders.
Froneman said the industrial action and flooding events resulted in significantly reduced production from the SA gold and US PGM operations during 2022, with a concomitant increase in unit costs.
Sibanye said gold production guidance for 2023 was between 756 000 to 788 000 tons, excluding a contribution from the group’s Beatrix mine in the Free State and the Kloof 1 plant in Gauteng.
“Production normalised and stable with SA gold geared to contribute significantly during 2023,” the group said.
2023 production from South African PGMs had been guided to between 1.7 to 1.8 million 4E ounces (oz) at all-in sustaining costs (AISC) of R20800/4E oz and R21 000/4E oz. This compares to 1.73m 4E oz in 2022, slightly lower year-on-year.
Production from the US PGM operations was guided to between 500 000 to 535 000 2E oz for 2023.
Looking ahead, Froneman said, “We look forward to a much better 2023 than we saw in 2020. The output should increase in the US. Recycling should be stable. The South African PGM's operations would have a very similar production forecast as costs will go up slightly.“
He said the South African gold operations should have a much improved 2023.
Anchor Capital investment analyst Seleho Tsatsi said the biggest drag on Sibanye’s earnings was the decline in PGM prices, particularly rhodium and palladium.
“2021 was a record year for the PGM basket price. Sibanye-Stillwater and the wider sector enjoyed record profitability and margins that year as a result. Since then, PGM prices have declined considerably.
“Palladium has more than halved from its peak. Rhodium is down close to two-thirds. These movements are likely to pressure earnings for 2023 as well. Sibanye is looking to diversify its business into battery metals. For now, PGMs remain the bulk of the company’s profits,” he said.
BUSINESS REPORT