Sibanye-Stillwater’s R37bn loss caps tough year as it sees tough outlook ahead

CEO Neal Froneman said during the company results presentation that the company had implemented “austerity measures”. File: Bloomberg

CEO Neal Froneman said during the company results presentation that the company had implemented “austerity measures”. File: Bloomberg

Published Mar 6, 2024


A R37.4 billion loss capped a challenging and troubled 2023 full year period for Sibanye-Stillwater, which has now embarked on cost saving initiatives on the back of lower platinum and nickel prices.

Market displeasure saw shares in Sibanye-Stillwater close 5.69% lower at R18.22 on the JSE.

After revenues for the full year period to end December 2023 narrowed by 18% to R113.6 billion, Sibanye-Stillwater sank to a R37.4bn loss, resultantly skipping dividends for the second half of the period under review. In the previous year, Sibanye-Stillwater made a profit of about R19bn.

“2023 was a challenging year for Sibanye-Stillwater due to lower metal prices. The company is taking steps to reduce costs, preserve capital, and invest in future growth opportunities,” said market analyst Marco Olevano.

The dip in revenues for the full year period under review has been attributed to “lower PGM (platinum group metals) and nickel prices”with shareholders having to content with the gold and PGM miner’s 53 cents per share interim dividend paid last year.

Sibanye-Stillwater had proactively repositioned “to rebase high-cost operations,” helping it accrue R6.6bn in cost savings and capital preservation. To achieve this, said CEO Neal Froneman during the company results presentation, the company had implemented “austerity measures”.

Sibanye-Stillwater’s closure of South African PGM shafts - Simunye, Siphumelele, 4 Belt and Rowland - had resulted in cost savings of R750 million during the period under review. The company has concluded retrenchment agreements for some of its South African PGM mines.

“We were affected by lower commodity prices. We are prepared for lower earnings in 2024 due to low commodity prices but we are disciplined and transparent in capital allocation,” said Froneman.

He said, “Further restructuring (would be) required” if low commodity prices persist and “earnings remain under pressure” against the backdrop of “ongoing inflationary cost” pressures.

The operating environment, he added, had remained “challenging, with macro-economic and geo-political uncertainty” persisting.

Although 2023 was largely characterised by PGM price weakness, Sibanye believes that this is temporary and does not signal a structural change in PGM fundamentals.

“We are beginning to see increasing signs which support a better demand outlook. We believe that the precipitous decline in PGM prices during H1 2023 (first half), was due to a confluence of negative factors and exacerbated by unexpected destocking of inventory which caught the market by surprise, causing increased uncertainty and market anxiety,” explained Froneman.

Although the PGM market situation has been bleak for Sibanye-Stillwater and other miners of the metal, the company is constructive on the outlook for the lithium market and outlook despite current oversupply and the collapse in lithium prices.

Froneman said there was growing evidence that “permitting and financing new mine supply is becoming more challenging” and costly. Nonetheless, construction of the company’s Keliber lithium refinery had commenced in the first quarter of 2023 while the concentrator earth works started in the quarter to December, it said.

Sibanye-Stillwater, which also produces gold, had a strong balance sheet as at the end of the period under review, posting a R7.1bn turnaround in its South African gold mining adjusted earnings before interest, tax, depreciation and amortisation (Ebitda).

Its gold mining operations however also saw the closure of the Kloof shaft as well as deferment of another project, Burnstone, which whittled down spending by R1.1bn and R1.2bn from operating and and capital expenditures in addition to the shut down of the Beatrix 4 Shaft.

Impairments for the period ballooned to $2.6 billion (R49bn) emanating from the US palladium mining operations as well as a nickel operation in France. This has been attributed to the decline in metal prices as well as uncertainties in the outlook.

“While we continue to look at selective M&A, which will complement our existing business, our focus for now is on the Group's strategic essentials with a major focus on reducing both operating and capital costs and improving efficiencies whilst managing our operating entities and projects using the existing balance sheet,” said Froneman