Sibanye Stillwater Faces $2 Billion Loss Amid Palladium Market Challenges

Sibanye Stillwater, the Montana-based palladium mining operation, has reported a substantial $2 billion loss for 2023, attributing the downturn to an oversupply in the metals market that has led to a significant slump in prices. The multinational miner, with over 1,600 employees and contractors at its East Boulder and Stillwater mines, has faced challenging market conditions for platinum group metals (PGMs), prompting the elimination of over a hundred jobs in November 2023.

The price decrease for palladium, platinum, and rhodium, critical components in automotive catalytic converters, has been sharp, with a 33% drop year on year from 2022 to 2023. The U.S., contributing 7% to the global palladium supply, has been impacted by increased production from other countries, notably Russia, which produces 40% of the world's palladium supply and is a major nickel producer.

The global palladium market has been influenced by geopolitical factors, including EU bans on Russian nickel due to the Ukraine conflict and shifting demands for nickel in battery production. This has exacerbated the supply glut, further depressing prices.

COVID-19 has also played a role in reducing the availability of recycled palladium, with a 48% decrease in used palladium available for recycling. The pandemic has led to decreased vehicle scrapping rates and lower used vehicle trade-ins, affecting the supply of recycled palladium.

In response to these challenges, Sibanye Stillwater is exploring efficiencies to reduce expenses and is lobbying Congress for palladium to be included in a 10% production tax credit under the Inflation Reduction Act of 2022. This measure, if successful, could offer the company significant savings and help mitigate the financial impact of the current market conditions.