Gold price hits new high as momentum builds for Fed rate cut
Spot gold climbed 1.6% to a new all-time high of $2,554.78 per ounce.
Sibanye Stillwater Ltd. plans further restructuring at its mines in Montana that could cut output of palladium and platinum by as much as 45% in a bid to return them to profitability.
Palladium – the main metal produced at Sibanye’s US operations – is trading at less than a third of its peak in March 2022. The company says more cost-cutting is required at its American mining assets, after previously writing down their value by about $2.4 billion.
“Further restructuring of the US PGM operations is necessary to reduce cash outflows,” Sibanye said in a statement on Thursday.
The company said it would undertake a “fundamental review” of the operations to bring down costs. Sibanye shares jumped more than 13% in Johannesburg trading.
Sibanye’s diversification into platinum-group metals — from its original dependence on aging South African gold mines — yielded bumper profits in the early years of this decade. Now slumping prices have forced the company and peers like Anglo American Platinum Ltd. to slash costs and reduce their workforces.
The restructuring is likely to result in platinum and palladium production from the Stillwater assets in the US being reduced by approximately 200,000 ounces from 2025. Sibanye is forecasting output of 440,000-460,000 ounces this year.
The company intends to suspend operations at the Stillwater West project and curtail production at the East Boulder mine, while increasing output of higher grade material from Stillwater East. That will result in the loss of about 800 jobs, following smaller reductions that came when Sibanye shelved an expansion late last year.
The South African firm announced the new cost-cutting plans as it posted a first-half loss of 7.1 billion rand ($396 million). That included a 7.5 billion-rand impairment at the US mines.
Sibanye – which has about 15% fewer workers in South Africa than at the end of 2022 – said that PGM operations in its home country remained profitable even as the average price received for the metals was 28% lower than a year earlier.
The firm also cut its guidance for gold output in 2024 by as much as 19% following disruptions at two projects.
North American mines, which tend to contain more palladium, are particularly vulnerable in the current market. Sibanye’s peer Impala Platinum Holdings Ltd. is shortening the life of its asset in Canada. Projects in South Africa typically produce a greater share of platinum, which has dropped by a smaller amount.
Producers of PGMs – which are used in devices to curb emissions in gasoline and diesel vehicles – are focused on finding alternative long-term applications for the metals as electric vehicles increase their market share.
Sibanye has been bolstering its financial position. Last month, the company announced it had agreed €500 million of financing for a lithium project in Finland, concluded a 1.8 billion rand prepayment deal for gold production and increased its rand revolving-credit facility to 6 billion rand.
The miner said on Thursday that it’s in the advanced stages of securing an additional $600 million to $700 million through prepay and stream agreements for chrome, gold and PGM production.
Profit before some one-time items – known as headline earnings – declined 98% to 137 million rand.
(By William Clowes)
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