With platinum producers this week reporting a boost from the recent surge in metal prices, Sibanye-Stillwater said its US platinum group metals (PGM) operation had bounced back following a restructuring process and tax credit benefits from the Trump administration.
Sibanye operates the Stillwater and East Boulder mines in Montana, and is aiming to reduce production costs at its US PGM operations to $1,000 (R17,736) a 2E ounce through reviewing mine cycles and improving mine infrastructure and design.
In September, the company placed the cash-guzzling Stillwater West mine on care and maintenance, and shifted its focus to the higher-grade Stillwater East mine, resulting in an almost 40% cut in production, and the reduction of 800 jobs.
Speaking to Business Times after the release of the group’s financial results for the half year to June, recently appointed CEO Richard Steward said the operation had been making significant losses on every ounce. However, this has been reversed as the restructuring helped cut the all-sustaining cost from $1,400 an ounce to just over $1,200 at a basket price of $1,200 an ounce.
There has been a significant turnaround at Stillwater, and if the environment stays where it is in terms of commodity prices, we will see operation earnings being positive again during the course of this year and going into next year.
— Richard Steward, Sibanye-Stillwater CEO
“There has been a significant turnaround at Stillwater, and if the environment stays where it is in terms of commodity prices, we will see operation earnings being positive again during the course of this year and going into next year,” he said.
Sibanye-Stillwater’s financial highlights include receipt of R5.1bn in section 45X tax credits for producing PGMs in the US, and a 127% year-on-year jump in group adjusted earnings before interest, taxation, and appreciation (Ebitda) to R15.1bn “We have turned the corner from an earnings perspective, but it is still a time to be careful and continue to watch the balance sheet and earnings carefully,” Steward said.
Sibanye spokesperson James Wellsted said that in 2023, when PGM prices collapsed after China came out of Covid lockdown, there was a lot of inventory in the market.
“At that time, the analysts were predicting our downfall, saying we are going to have negative cash flow and negative earnings, and our balance sheet was going to get into financial distress, and we’d have to raise money in the market,” he said.
In the second half of 2023, Sibanye-Stillwater took measures to restructure, and closed loss-making mines to optimise profitability at high-cost operations “We recapitalised our balance sheets through various streams and capital transactions. That prediction of losses continuing because PGM prices were going to stay low did not come true. We have now gone into a significantly higher earnings phase,” said Wellsted.
Competitor Impala Platinum reported a R9.9bn Ebitda, and an adjusted net cash balance of R8.1bn for the year ended June. CEO Nico Muller said Implats had also bounced back from a weak price environment that had necessitated the restructuring and the deferment of projects — including the decision to curtail the Marula Phase 2 project due to lower prices. “We have prices that are 30% above where they were three months ago,” he said.
“We have emerged out of this process with a very strong and flexible balance sheet. I think the company has entered a new era, where we can afford to continue creating strength. Structurally, we are in a very favourable position, we are an integrated producer, we have the ability to optimise our processing with our mine supplies.”
Muller said the group will, however, continue with plans to suspend operations at its Ontario mine in Canada at the end of the financial year. “The position remains unchanged. Given the increase in the palladium price to roughly $1,100 an ounce we are evaluating if there is potential for any life-of-mine extension, but that has not been concluded. The scope of that is fairly limited. For us to come back with a multiple-year extension, there is significant capital investment required, particularly for the tailings dam facility,” he said.
Impala said it had introduced an optimised operating strategy and enhanced maintenance protocols across its furnaces. “The phased introduction of select design enhancements will commence in the 2026 financial year, beginning with the scheduled rebuild of Furnace 4 in December 2026.”
On Friday, another PGM miner, Northam Platinum, reported a 6.9% increase in revenue to R32.9bn, but gross profit reduced by 25% to R3.5bn.
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