Sibanye-Stillwater Reports Larger-than-Expected Loss, Cuts Gold Production Guidance
Sibanye-Stillwater, a major South African precious-metals miner, has revised its gold production guidance downward for the year and reported a larger-than-expected net loss for the first half of 2024. The company’s financial performance was hurt by persistently weak platinum prices and a $401 million impairment related to declining palladium price forecasts.
For the first half of the year, Sibanye-Stillwater posted a net loss of $379 million, a sharp reversal from the $427 million profit it recorded a year earlier. This loss exceeded analysts’ expectations, which had predicted a net loss of $60.8 million. Revenue also fell by 11% to $2.95 billion, below the expected $3.04 billion, according to a Visible Alpha survey.
The weaker results were largely attributed to the slump in platinum group metal (PGM) prices, which weighed on profitability for the company, one of the world’s leading producers of PGMs. The $401 million impairment resulted from lowered palladium price forecasts, which diminished the miner’s expected future cash flows.
Despite the overall decline, Sibanye-Stillwater reported a 16% increase in platinum-metals output from its U.S. operations, and a 3.7% rise in production from its South African sites. However, gold production fell by 17%, primarily due to the closure of a shaft at the Kloof mine in South Africa. Consequently, the company reduced its gold output forecast for the year to between 530,000 and 563,000 ounces, down from the previous guidance of 627,000 to 659,000 ounces. Guidance for all other operations remained unchanged.
Sibanye-Stillwater, along with other South African miners, continues to face inflationary pressures, compounded by the weakness of the rand and low platinum prices. In response, the company cut more than 2,000 jobs in July and announced plans to merge its gold and PGM operations in South Africa. Sibanye-Stillwater said it expects to see the full benefits of this restructuring gradually over the next six months, with complete impact expected by next year.
In a strategic pivot towards metals used in electric vehicle (EV) batteries, Sibanye-Stillwater recently canceled a contract for its nickel refinery project in France, with plans to repurpose the site to produce precursor cathode active material—an essential component in EV batteries. This decision comes as the company shifts its focus towards EV materials like nickel and lithium, crucial for the growing battery market.
Additionally, Sibanye-Stillwater secured final funding for the development of its Keliber lithium project in Finland, expected to be operational by 2025. Once completed, the Keliber project will be the first in Europe to produce battery-grade lithium, aligning with the European Union’s push to reduce dependency on China’s lithium supply.
Headline earnings dropped sharply to $7 million, down from $324 million a year ago. The company also opted not to declare an interim dividend, consistent with its current policy.
