South Africa's Neal Froneman alerts Sibanye shareholders to potential U.S. mine shutdown

Oluwatosin Racheal Alabi -

Key Points:

  • Sibanye faces potential shutdown of its Montana palladium mine.
  • CEO Neal Froneman emphasizes need for palladium price recovery.
  • The company already took a $2.1-billion writedown on U.S. assets.

Neal Froneman, a prominent South African business executive in the global precious metal mining sector, warns that Sibanye Stillwater may have to halt operations at its Montana palladium mine if prices don’t recover, following a $2.1-billion writedown on U.S. assets this year.

    Speaking at a London conference, Froneman warned, “The future of Stillwater remains in the balance. If there’s no correction in the price soon, as strategic as it is, we will have to put it on care and maintenance.”

    Sibanye takes $2.1-billion writedown amid declining palladium prices

    Earlier this year, Sibanye took a $2.1-billion writedown on its unprofitable U.S. assets, driven by falling palladium prices, rising costs, and constraints on expansion projects. Sibanye acquired the Montana operations in 2017 when it bought Stillwater Mining Co. for $2.2 billion.

    Last year, the company also cut some jobs at the mine to reduce costs. Despite these challenges, Froneman emphasized in March that the Montana operation remains a “strategic asset” and that it was “not due for closure at this stage.” However, he also noted that the company must ensure the mine becomes profitable, even with depressed palladium prices.

    Palladium, primarily used in catalytic converters to curb auto emissions, has faced declining demand due to the shift towards electric vehicles and substitution with platinum. Since its peak in March 2022, palladium prices have dropped about 70 percent.

    Sibanye’s U.S. operations mainly produce palladium, while its South African mines are richer in platinum. The company’s strategy now hinges on a potential recovery in palladium prices to sustain its Montana mine operations.