Sibanye-Stillwater eyes cuts at US mines on weak palladium prices

Precious metals producer Sibanye-Stillwater (JSE: SSW)(NYSE: SBSW) warned on Thursday of further changes at its palladium operations in the United States to adjust to an ongoing decline in the metal’s prices, which have “dropped faster than anticipated”.

The announcement comes only a week after the South African miner said it would cut more than 4,000 jobs across its platinum group metal (PGM) mines in the home country. It also said it would shut two loss-making shafts, as part of a company-wide restructuring to position operations “for optimal performance”.

The company has faced headwinds at its US operations beyond issues related to the drop in PGMs, used in catalysts that curb toxic vehicle emissions. It had to suspend production in March from the lower levels of its Stillwater West mine in Montana following an incident that damaged the shaft infrastructure. The same mine was halted for nearly six weeks last year while the company worked on repairing damage caused after widespread flooding in the western state.

Sibanye-Stillwater said that while US operations had recovered from the stoppage, cost pressures and a reliance on contractors due to a persistent skills shortage in Montana and across the US were likely to keep costs elevated.

The company reduced production targets for the year in the US to 420,000-430,000 ounces from 460,000-480,000 ounces previously, within a higher all-in sustaining cost range of $1,750-$1,825 per ounce, up from the previously guided $1,550-$1,650 an ounce.

Prices for the main PGMs — platinum and palladium — have dropped 14% and 38% respectively this year, with palladium prices reaching about $1,110 an ounce on Thursday and platinum close to $920.

Kroondal and Mount Lyell mines

Separately, Sibanye-Stillwater announced it had assumed full ownership of Kroondal platinum mine in South Africa earlier than expected, adding that it expects to extend the mine’s life until at least 2029. Without the deal, Kroondal would have closed in 2025.

The Johannesburg-based company, which has recently diversified into battery minerals, said it was in the process of buying the historic Mount Lyell copper mine in Tasmania.

“We identified copper as an essential metal necessary to enable the clean energy transition,” chief executive officer Neal Froneman said in the statement. “Mount Lyell potentially provides a low-cost exposure to copper, adding primary production of copper to our current lithium and nickel exposure.”

Shares in the company were down on pre-market in New York at $4.91. So far this year, the stock has fallen almost 55% on both the US and the South African markets.