Sibanye-Stillwater has produced and sold more platinum group metals (PGMs) in its latest quarter than a year ago, but the basket price being cut almost in half has hurt one of the world’s biggest precious metal miners.
The company, valued at about R65.6bn on the JSE, said on Thursday in a production update for the quarter to end-September that its PGM production grew 7.5% to 557,106oz and the amount that it sold was up 16.5% to 549,696oz, but year on year the basket price plunged 40.9% to R23,933/oz and 45.8% in dollar terms to $1,287/oz.
This resulted in earnings before interest, taxes, depreciation and amortisation (ebitda) falling 64.2% to R3.03bn.
The drop in prices was one reason the miner gave last week for retrenchments in SA that could lead to up to 4,000 people losing their jobs as commodity prices have dropped from the record highs reached during the Covid-19 pandemic.
“The global macroeconomic environment remains challenging, and we continue to assess the positioning of our operations for optimal performance and sustainability through the cycle,” CEO Neal Froneman said.
“We remain prudent with capital investment and utilising our balance sheet to fund external growth during this challenging period. We are conscious of the necessity of appropriately managing debt, mindful of our leverage position during periods of decreasing, or volatile, profitability and earnings,” he said.
The miner said the downturn in the palladium price in 2023 has “surpassed our expectations, dropping lower and faster than anticipated”, adding that despite the greater production, “persistent inflation and the continued impact of skills shortages have resulted in costs remaining significantly higher than planned”.
Sibanye is one of the world’s biggest PGM producers, along with Anglo American Platinum, Impala Platinum and Northam.
But as it looks to cut jobs in SA, Sibanye said on Wednesday that it is forging ahead with a feasibility study on the idle Mt Lyell copper mine in Australia after exercising an option to buy the asset for $10m, as its plans to acquire Zambia’s Mopani Copper Mine come under pressure from deep-pocketed Emirati suitors.
Sibanye had until Sunday to decide whether it is interested in buying the mothballed Mt Lyell, which has produced copper, gold and silver since 1893. The group took time to exercise the option, which was made available to it in the 2023 deal for full ownership of New Century Resources in Australia.
Froneman has been hunting for green metals to meet the rising demand for battery metals because of the move to cleaner resources and technologies.
Over the past few years, Sibanye has diversified its asset portfolio into battery metals mining and processing and has increased its presence in the circular economy by growing and diversifying its recycling and tailings reprocessing operations.
The operational guidance for the rest of its 2023 financial year remains unchanged in SA with 1.7-million to 1.8-million ounces expected at all-in sustaining costs (AISC), a measure of operating efficiency, of R20,800/oz-R21,800/oz; 420,000oz-430,000oz in the US at $1,750/oz-$1,825/oz; and 19,500kg-20,500kg of gold in SA at R1,190,000/kg and R1,290,000/kg.
With Kabelo Khumalo
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