Sibanye Stillwater Faces Half-Year Loss Due to $420 Million Writedown Amid Palladium Price Drop
Sibanye Stillwater, a South African mining company, announced that it expects to report a loss for the first half of 2024, driven by a 7.5 billion rand (USD 420 million) writedown on its U.S. assets. The company attributed this to falling palladium prices, which have impacted the profitability of its operations in the United States.
For the six months ending June 30, 2024, Sibanye anticipates a loss per share ranging between 2.508 rand and 2.772 rand, a stark contrast to the 2.62 rand per share profit it recorded during the same period last year. The writedown primarily affected Sibanye’s two U.S. mines, which mainly produce palladium. These operations yielded 238,139 ounces of palladium and platinum in the first half of 2024.
The company explained that the impairment was mainly due to a reduction in the medium- to long-term forecasted prices of palladium, which lowered the expected future cash flows from these assets. Market consensus has reduced long-term palladium price estimates by 5% to 8%, affecting the valuation of Sibanye’s U.S. operations.
The palladium market has been under pressure as the automotive industry, a major consumer of palladium, increasingly shifts towards electric vehicles, reducing demand for the metal. Palladium prices dropped by 40% in 2023 and have continued to fall, declining by an additional 10% this year.
Sibanye reported that the average dollar price for its U.S.-produced metals fell by 30% in the first half of 2024, while the rand-denominated price for its South African platinum group metals (PGMs) basket decreased by 28%, leading to a significant decline in revenue.
This follows a challenging 2023 for Sibanye, where the company reported a USD 2 billion loss, including USD 2.6 billion in impairments across its U.S. palladium mines, a nickel operation in France, and a gold mine in South Africa.
Other industry players, such as Impala Platinum and Northam Platinum, have also expressed concerns about the future of South Africa’s platinum industry, given the ongoing decline in metal prices. Sibanye Stillwater is scheduled to release its full financial results for the first half of 2024 on September 12.
