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 prices, which have “dropped faster than anticipated.”

The announcement comes only a week after the South African miner said it might 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 U.S. operations beyond issues related to the drop in prices of 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 American operations had recovered from the stoppage, cost pressures and a reliance on contractors due to the persistent skills shortage in Montana and the U.S. were likely to keep costs elevated.

The company reduced production targets for the year in the U.S. to 420,000-430,000 oz. from 460,000-480,000 oz.  previously, within a higher all-in sustaining cost range of US$1,750-$1,825 per oz., 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 US$1,110 an oz. on Thursday and platinum close to US$920.

Kroondal and Mount Lyell mines

Separately, Sibanye-Stillwater announced it had assumed full ownership of the 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,” CEO 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 to US$5.00 on Thursday morning, close to its 52-week low of US$4.86. It has a market capitalization of US$3.5 billion.