Sibanye doubles its profit from SA platinum mines, but sword hangs over Marikana

A mine worker walks past the Marikana platinum mine.
A mine worker walks past the Marikana platinum mine.

Sibanye Stillwater suffered a headline loss of almost R1.3bn for the six months to end-June due to a five-month long strike at its South African gold operations.

The company - the world’s biggest producer of platinum, the second-largest palladium producer and third-biggest gold miner –  says local gold mines reported a R2.9bn loss (before interest, taxes, depreciation and amortization) following the AMCU-led strike, which started in November. It more than cancelled out the R2bn in earnings delivered by its local platinum mines. In the end, AMCU accepted the same wage increases and other terms agreed six-months earlier with the other unions.

In a statement accompanying the results, CEO Neal Froneman welcomed new legislation that demands secret ballots about strikes, warning that Sibanye will make sure secret ballots are used "should we end up with a wage dispute during the current platinum negotiations".

Earlier this month, AMCU said that Sibanye's wage offer to platinum workers was insulting and that it believed the company was trying to provoke the union to enter into a strike.

Gold production only started normalising this month, but the company is already expecting a turnaround in the financial performance of its gold operations, thanks in part to the rocketing gold price – which is currently trading at its best levels in six years.

The average price Sibanye received for its platinum-group metals rose by 34% over the past six months, which helped its local platinum mines to double their profit before interest, taxes, depreciation and amortization (Ebitda).

Its American platinum operations saw a 36% increase in Ebitda to almost R3bn.

Sibanye believes that at current metal prices, provided there are no further output disruptions, it should help the "rapid" paying down of its debt and that its outlook for the second half of the year is significantly better. Sibanye’s share price rose by more than 3% on Thursday afternoon, following the release of the results.

Marikana’s future

Sibanye is, however, very downbeat about the prospects of the Marikana platinum mine near Rustenburg, and says the review of the entire operation is well advanced. It acquired Marikana as part of its takeover of Lonmin, which was recently finalised.

It says Marikana’s production is well below plan and operating costs are unsustainably high.

"Whilst the improved PGM price environment may justify extending the operating lives of some of these operations thereby mitigating the impact on job losses, a number of shafts have finite reserves and derive limited benefit from higher PGM basket prices. Further detail will be provided following the completion of this review."

Some 28 000 workers are employed at Marikana.

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