Sibanye-Stillwater may retrench up to 8.6% of the workforce within its main SA platinum group metals (PGM) operations, laying bare the crippling impact of falling commodity prices over the past 18 months.
Sibanye is one of the world’s biggest PGM producers, along with Anglo American Platinum, Impala Platinum and Northam.
At least 4,000 of Sibanye’s total workforce of 46,432 employees in its local PGM operations could be without jobs at the end of the restructuring exercise, which will affect four of its shafts in Rustenburg in the North West.
The miner’s share price was down 4.6% by the close on Wednesday.
“The PGM players are all on a knife-edge, obviously some much more than others. There will almost certainly be further retrenchments if PGM prices go lower from the current levels,” said Peter Major, veteran mining analyst and director of mining at Modern Corporate Solutions.
“Those who spent the most during the Covid-19 boom times will be extremely worried about the current situation. They should have saved more for the inclement days ahead.”
In justifying its decision for the potential layoffs, Sibanye also cited above-inflation increases in electricity, water fuel and other consumables, along with the downturn in commodity markets.
“It’s all about securing sustainable production levels, thus avoiding putting other shafts at risk in the future,” spokesperson James Wellsted said.
“Our operating margins have come under pressure from the drop in PGM prices as well as a number of industrywide challenges that included load curtailment and crime.”
The consultation process with labour unions comes three weeks after CEO Neal Froneman fired a warning shot when he told Reuters there could be job losses in marginal mines given the prevailing PGM prices.
Sibanye has served section 189 notices as required by the labour legislation to remaining staff at the Simunye shaft, which is in the process of being closed after reaching the end of its economic life. Others have been deployed to other shafts.
The 4B shaft has depleted its economically extractable reserves. Its closure is subject to consultations with the unions.
The Rowland shaft “has not delivered as planned due to various operational constraints and has achieved only 64% of planned production year to date”, according to the mining producer. As an alternative to closure, the company aims to rationalise the workforce.
The Siphumelele shaft experienced seismic activity in 2022, which for safety reasons restricted access to certain production areas. Its workforce could also be reduced.
Workers who may be affected in the overall restructuring include 3,500 employees and 595 contractors.
The steep fall in metal prices has affected Sibanye’s market valuation and that of its peers. Their stock market prices tend to mimic underlying PGM prices, which are determined on the international market based on supply-demand dynamics.
Earlier in October, Morgan Stanley analyst Christopher Nicholson wrote in a note that Sibanye’s balance sheet could swing to a net debt position in the next two-and-a-half years.
He cast doubt on Sibanye’s ability to repeat the level of success in acquisition-led growth seen between 2014 and June 2023 as the company branches into the battery metals business to diversify its income stream across the US and Europe.
Amid much criticism, Froneman acquired unprofitable PGM mines in the Rustenburg platinum belt at the bottom of the cycle as he sought to insulate the group from the deep and costly SA gold mines hived off from Gold Fields in 2013.
He later oversaw a strategy that added more PGM assets to the group through the acquisition of US-based Stillwater. The strategy delivered enormous value to shareholders over a long period, with the share price rising strongly from its listing price of R13 in 2013.
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