Sibanye-Stillwater cuts about 300 jobs in US to lower costs

Precious metals producer Sibanye-Stillwater (NYSE: SBSW) said on Wednesday it will proceed with expected job cuts at its U.S. platinum-group metals (PGM) operations, as declines in metals prices make it harder for the company to pay its costs. 

About 100 employees and around 187 contract workers would be let go, it said.

“We have taken decisive action to address costs at the U.S. PGM operations, to ensure the sustainability of these long-life operations during a challenging period of lower than anticipated PGM prices,” CEO Neal Froneman said.

The palladium price has dropped more than 40% so far this year, particularly hit by weak demand in China, while primary metal platinum is down 13%.

The Johannesburg-based miner said the restructuring at U.S. operations isn’t expected to significantly impact output or recycling operations.

Sibanye-Stillwater, which earlier this month announced a US$500 million ($679.9 million) convertible bond sale to bolster its balance sheet, has faced headwinds at its U.S. 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 U.S. operations had recovered from the stoppage, cost pressures and a reliance on contractors due to a persistent skills shortage in Montana and across the U.S. were likely to keep costs elevated.

The company noted it was already consulting with labour unions in its home country over operating changes that could impact about 7,000 jobs at PGM and gold mines. 

Metal price declines have driven other platinum miners in South Africa to look at reducing their workforce. Impala Platinum Holdings (JSE: IMP) is offering voluntary job cuts, including at its deep-level Rustenburg complex. Anglo American Platinum (JSE: AMS), about 79% owned by Anglo American (LSE: AAL) has also held talks with the government about potential job cuts. 

The imminent layoffs will worsen the situation in South Africa, the most developed country in sub-Saharan Africa, where one-third of the workforce is unemployed and only 40% of the 40.7 million people of working age have formal jobs, according to official data.

At US$4.55 ($6.19) apiece, Sibanye-Stillwater shares traded on Wednesday morning close to the floor of their 52-week range of US$4.00 and US$12.43. It has a market capitalization of US$3.2 billion.