Sibanye-Stillwater, the South African multinational precious metal mining group under the leadership of CEO Neal Froneman, has witnessed a dramatic decline in its share value, with a year-to-date loss of 51.2 percent.
The company’s shares dropped by an additional 1.29 percent during today’s trading hours, reflecting the ongoing struggles faced by the mining conglomerate. These challenges stem from a combination of falling precious metal prices and operational hurdles.
The recent slump can be largely attributed to Sibanye-Stillwater’s announcement that it is considering significant changes in its palladium mining operations in the United States. The move comes as a response to the unexpected and rapid decline in metal prices, particularly palladium, which has significantly impacted the company’s profitability.
Operational challenges in Montana
Sibanye-Stillwater has been wrestling with the need to cut costs at its Stillwater mines in Montana, USA, especially as palladium prices weakened, and unexpected flooding incidents curtailed production last year, pushing up operational costs.
Froneman, the company’s CEO, acknowledging these challenges, stated, “The decline in the palladium price during 2023 has surpassed our expectations, dropping lower and faster than anticipated.” However, the company has not yet disclosed the specifics of the proposed changes.
Despite a recovery from an eight-week work stoppage earlier in the year due to shaft damage at the Stillwater West mine, cost pressures and reliance on contractors due to a persistent skill shortage in Montana and the USA are expected to continue driving costs upward.
Sibanye-Stillwater has also revised its output forecasts for its U.S. PGM operations, now projecting a range of 420,000 to 430,000 ounces, down from the previous estimate of 460,000 to 480,000 ounces.
The revised all-in sustaining cost range is $1,750 to $1,825 per ounce, up from $1,550 to $1,650 per ounce. This adjustment is due to the challenging market conditions, with platinum and palladium prices down approximately 14 percent and 38 percent, respectively, in 2023.
Sibanye-Stillwater plays a pivotal role in the global precious metals industry, with operations in South Africa and involvement in gold and base metal mining projects in South Africa and the Americas.
Froneman, a driving force behind the company’s transformation into a primary producer of platinum, palladium, and gold, holds a 0.3-percent stake in the precious metal mining group, equivalent to 8,382,849 ordinary shares.
Global precious metals industry in turmoil
The global Precious Group Metal (PGM) industry has been grappling with high operating costs and diminishing prices, putting immense pressure on industry leaders like Sibanye-Stillwater.
Sibanye-Stillwater, South Africa’s largest mining sector employer, now faces the formidable task of restructuring its operations. Regrettably, this may lead to the loss of thousands of jobs.
Last week, the company announced its decision to close four underperforming platinum group metal (PGM) shafts in South Africa. This decision puts the livelihoods of 3,500 permanent employees and 595 contractors at risk.