Sibanye Q1 update progress on safety, restructuring planned
10 May 2024
Sibanye-Stillwater saw improvement in safety metrics while navigating restructuring efforts and volatile commodity markets, its CEO stated in the latest quarterly report. "The continued improvement in the Group's safety performance affirms our strategy, with risks decreasing across all incident categories," said CEO Neal Froneman.
In February 2022, Sibanye-Stillwater successfully concluded the €85m transaction to acquire French mining group Eramet’s Sandouville hydrometallurgical nickel processing facilities near Le Havre, France’s second largest industrial port.
"We are confident that the planned restructuring in South African operations will secure a lower cost structure, despite some short-term disruptions."
The company saw a 15% decline in the Serious Injury Frequency Rate (SIFR), marking its third consecutive annual improvement. Lost Day Injury Frequency Rate (LDIFR) and Total Recordable Injury Frequency Rate (TRIFR) also showed notable year-on-year decreases.
US effect
The restructuring efforts that were put into place in the US PGM operations towards the end of 2023 and the start of 2024 have started to yield substantial benefits. These changes have led to improvements in the operations and have shown positive results.
Despite a drop in the prices of 2E PGM basket in the first quarter of 2024, the Adjusted Ebitda has seen an improvement. This indicates that the operations have become more efficient and profitable even in the face of lower market prices.
Looking at the key metrics, there has been a 22% increase in the underground 2E production compared to the previous year. The all-in sustaining cost (AISC) has decreased by 28% year-over-year to $1,335/2Eoz, which is within the guidance range of $1,365 to $1,425/2Eoz.
Capital expenditure for the period was between $175 and $190m. These figures demonstrate the effectiveness of the restructuring efforts.
In South Africa, gold production declined 18% with a higher AISC due to a shaft closure in 2023, while PGM operations faced headgear incident disruptions. Increased ownership in a major mine partially offset these challenges.
Refinery boost
In Europe the Sandouville refinery achieved a 42% production increase due to mid-2023 repairs and plant upgrades. Nickel equivalent sustaining costs fell 40% mainly due to lower feedstock prices.
The company is also conducting a pre-feasibility study to repurpose the refinery for precursor cathode active material (pCAM) production.
While PGM prices depressed Q1 2024 earnings, the company remains bullish on the market long-term.
"We believe the drivers of the PGM price decline are temporary," Froneman stated. "Destocking, along with constrained primary supply and limited recycling, suggest a more positive outlook."
Despite commodity price pressures, the group maintains it has sufficient liquidity and balance sheet flexibility.
Enhanced profitability from restructuring, supplemented by non-debt solutions like pre-pays and royalty streams, are expected to bolster financial strength.
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