Diversified mining home Sibanye-Stillwater has warned it’d shut unprofitable shafts this 12 months if platinum group metals (PGM) costs don’t decide up — a transfer that might result in additional job losses within the sector.
The group additionally expects general PGM manufacturing from SA to dip barely this 12 months.
“SA producers have made vital efforts to chop prices and cut back capex spending whereas sustaining output,” the corporate mentioned in its annual report, revealed on Friday.
“Nevertheless, rising prices and a low basket value imply that the mines on the high of the price curve are loss making. If the basket value doesn’t enhance this 12 months it could turn out to be obligatory to shut out some unprofitable areas.”
The PGM sector, the largest employer in SA’s mining business final 12 months, has shed about 10,000 jobs as mining homes recalibrated operations in response to plunging costs.
SA, the world’s largest platinum producer, has been bearing the brunt of the worth droop over the previous two years.
Anglo American Platinum final 12 months lower 3,700 jobs to scale back prices by about R5bn, whereas Sibanye-Stillwater let go of two,600 staff at its PGM operations in SA and Impala Platinum slashed its workforce by 4,000 staff.
Sibanye mentioned it was positioning its PGM manufacturing profile to align with the longer-term market necessities, “whereas build up functionality to service the necessities of the electrified car market by means of participation in automotive battery worth chains, significantly in Europe”.
The group can be working with companions to develop new purposes for PGMs to offset an eventual decline within the autocatalyst market.
Nonetheless, the latest tapering within the development of electrical car (EV) gross sales and a surge in demand for hybrid vehicles, which require catalytic converters to adjust to emission requirements, have given PGMs a brand new lease of life.
Sibanye mentioned recycling of autocatalysts was anticipated to stay difficult this 12 months.
“Persistent inflationary pressures, excessive rates of interest and elevated new automobile costs are more likely to encourage shoppers to maintain second-hand autos on the street for longer. Consequently, recycling volumes are anticipated to see little enchancment,” it mentioned.
“International mild car manufacturing is forecast to rise in 2025. Nevertheless, the share of BEVs [battery electric vehicles] is anticipated to extend to fifteen.6% from 12.7% final 12 months whereas manufacturing of ICE [internal combustion engine] and hybrid autos is predicted to say no. Consequently, autocatalyst demand is anticipated to fall.”
PGMs have been a high income supply for Sibanye below outgoing CEO Neal Froneman, who has been on an acquisition spree over the previous decade, not often dropping out on clinching offers. In 2016 Sibanye purchased Aquarius Platinum in SA, together with the Mimosa three way partnership with Impala Platinum in Zimbabwe.
That was adopted by the acquisition of the Rustenburg operations from Anglo American Platinum.
In Might 2017, Froneman splashed out $2.2bn on US-based Stillwater Mining Firm — the biggest transaction globally within the PGM sector in additional than a decade.
The spending spree continued in 2019 with the acquisition of Lonmin — a deal that comprised the Marikana PGM mining operations and related processing, base metallic and treasured metallic refining operations.
Sibanye mentioned in its annual report that SA PGM acquisitions delivered a return of virtually R140bn in core earnings over time.
“Since 2016, the mixed worth generated by the SA PGM operations (measured as mixed adjusted ebitda generated much less complete capex invested) is about R138bn, a fabric 6.5 instances payback on funding over a seven-year interval,” it mentioned.
“After deducting the whole acquisition price for the SA PGM operations of R21.4bn the web return on funding from these acquisitions is R117bn.”
khumalok@businesslive.co.za
