Gold and platinum group metal (PGM) miner Sibanye-Stillwater opted not to declare an interim dividend despite narrowing its losses to $211m in the first half of this year, from $372m in the previous year.
The lack of an interim dividend comes as the group sticks to responsible capital allocation through a “difficult cycle”.
This as the group prepares for life without long-time CEO Neal Froneman, who is set to retire at month-end and be replaced by Richard Stewart.
Buoyed by a surge in gold prices and resurgence of PGM prices, Sibanye made steady progress in strengthening its bottom line in the six months to end-June.
Record gold prices, with R5.1bn in US PGM production credits, saw the group report a 19-fold increase in headline earnings to R5.4bn between end-December and end-June.
However, the group in the six months to end-June wrote down the value of several assets due to changes in US policy and weak lithium markets.
The group recognised just shy of R10bn in impairments in the six months to end-June, resulting in a basic loss of R3.6bn.
With lithium markets set to remain in a period of oversupply and low prices for a longer time than previously forecast, the recoverable value of the company’s Keliber lithium project in Finland was adjusted downward, resulting in a R5.34bn impairment to its property, plant and equipment.
Another R3.83bn impairment was recognised on the group’s US PGM operations after President Donald Trump withdrew the production credits previously allocated to local PGM producers as part of that country’s drive to promote domestic production of critical minerals.
Trump’s One Big Beautiful Bill Act, signed into law in July, changed how tax credits for critical minerals are handled under the Inflation Reduction Act. Through the bill, Trump plans to phase out the credits awarded to producers such as Sibanye in 2031-34.
Still, Sibanye’s US PGM operations have been the company’s saving grace in a period of heightened geopolitical tension, offering shelter from the storm of trade wars.
These operations are the only source of primary PGM supply in the US, making them strategically significant for the country. PGMs are designated as critical minerals by the US, given their importance in the energy transition, and play a role in military technology.
The US PGM operations still have eight years to benefit from the “critical financial support” provided under the Inflation Reduction Act, said the company. In the six months to end-June, the group enjoyed $159m (R2.8bn) in production credits for these operations.
Impairments aside, Sibanye boasted a strong financial performance in the US, with adjusted earnings before interest, tax, depreciation and amortisation (ebitda) soaring to $151m, from $27m in the previous first half.
In SA, the group’s PGM output edged down 3% to just more than 800,000oz, resulting in a 2% slip in adjusted ebitda to $260m.
However, the robust PGM performance was partly offset by a slump in production from the group’s ailing SA gold mines, which continue to contend with rising electricity prices and gold theft.
Against this backdrop, the group was forced to lower production guidance for the SA gold operations in the second quarter. The miner reported a 14% slump in gold output while sales of the precious metal dropped 21% year on year.
Thanks to soaring gold prices however, adjusted ebitda from these operations more than doubled to R4.8bn.
In his last results as CEO, Froneman said he was confident that the “proactive and decisive” actions taken over the past two years to optimise operational profitability had yielded results.
“The decisions we took and actions we implemented were not taken lightly, but were deeply considered and measured, avoiding knee-jerk responses to the deteriorating environment, before being decisively implemented,” he said.
“We approached the restructuring in a phased and considered manner, focusing on high-cost mines to restore profitability and ensure their survival, and closing shafts which were at, or close to, the end of their operating lives, or unable to restructure effectively.”
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