Led by South African mogul Neal Froneman, Sibanye-Stillwater slashes output target for U.S. mines
Sibanye-Stillwater has reduced its output forecast this year for its palladium and platinum mines in Montana by more than 20 percent due to operational challenges caused by regional floods.
Sibanye-Stillwater is a multinational precious metal mining company based in South Africa. Under the leadership of CEO Neal Froneman, the company is involved in gold and base metals mining in South Africa and the Americas.
The South African mining company has reduced its output forecast for its palladium and platinum mines in Montana to 445,000 to 460,000 ounces in 2022 from 550,000 to 580,000 ounces earlier this year.
The decision to reduce its output forecast comes nearly two months after it suspended operations in Montana for seven weeks due to regional floods that disrupted operations on June 13.
Stillwater’s Montana mine accounts for ab08t 60 percent of the mined production from its U.S. PGM operations.
Aside from operational challenges, the decision to reduce its output forecast can be linked to expectations that the palladium market will swing into surplus by the middle of this decade, necessitating operational repositioning in the event of future price weakness.
“Hence, with our view of the palladium market plus the macroeconomic environment we are going to be dealing with going forward, we really need to reconsider what’s the best way of extracting value out of the assets,” Froneman said.
The company’s cautious approach may also result in the postponement of spending on its Blitz project in Montana, as Froneman stated: “It just doesn’t seem to make good or smart commercial sense to spend millions or billions on a capital project that will deliver into price weakness in the future.”
Shares in the mining firm closed trading on Friday at R40.68 ($2.52), 6.14-percent lower than their opening price on the local bourse, in response to the decision to cut its output forecast in the United States, while maintaining the output profile for its operations in South Africa.
Sibanye-Stillwater’s market cap is R115 billion ($7.1 billion) at current prices, while Froneman’s minority 0.074-percent stake in the company is valued at R85.1 million ($5.26 million).