Sibanye-Stillwater to axe 4,000 jobs in South African gold mines restructuring

Sibanye-Stillwater (JSE: SSW; NYSE: SBSW) says the planned reorganization of its four gold operations in South Africa could lay off 4,022 workers — 3,107 employees and 915 contractors. 

The company had a global workforce in 2022 of more than 84,000 in South Africa and the United States. 

In South Africa, the precious metals producer’s Beatrix 1 shaft failed to achieve planned production and Kloof 4 was shut last year, resulting in the Kloof 2 plant not receiving enough ore to be profitable, the company said on Thursday. The restructuring follows a business review begun in October at its gold mines in the home country.  

This year’s gold production forecast is now 627,000 oz. to 659,000 oz., excluding tailings reclamation projects by its DRDGold unit, at an all-in sustaining cost (AISC) of of US$1,955 to US$2,133 per oz. Production could be 625,000 oz. this year at an AISC of US$2,050 per oz., BMO Capital Markerts said in a note on Thursday. 

“The restructuring may have the impact of improving margins in Sibanye-Stillwater’s gold portfolio, despite the production decrease,” BMO mining analyst Raj Ray said. “The previously telegraphed US$69 million capital deferral at Burnstone meant that restructuring was inevitable.”

At Beatrix in December, the company was placing No.4 shaft was on care and maintenance while mining was mostly in the No.3 and No.1 shafts, BMO said. The life-of-mine plan at Beatrix ends in 2026 and has limited extension opportunities with current reserves at 700,000 ounces. Beatrix produced 136,000 oz. gold last year, or about 21% of the country’s total gold output, excluding DRDGold. 

“We continue to act prudently to protect the balance sheet and ensure the sustainability of the group,” CEO Neal Froneman, said in a statement. “We are committed to constructively engaging with affected employees and through their representatives to minimize job losses.”

PGM cuts

The restructuring is in line with the Sibanye-Stillwater’s previous cost-cutting measures that saw it axe jobs at all its platinum group metal (PGMs) operations, including those in the United States.

Prices for the main PGMs — platinum and palladium — plummeted by about 38% and 63%, respectively, in 2023.

The company has faced headwinds at its U.S. operations beyond issues related to the price collapse of PGMs, used in catalysts that curb toxic vehicle emissions. Those mines have been affected by weather-related incidents, particularly flooding. 

Sibanye-Stillwater’s boss recently indicated his company is considering raising about $500 million through prepayment arrangements, such as metals streaming, to strengthen its cash position.

Shares in Sibanye-Stillwater fell 2% on Thursday in Johannesburg to 25.2 rand ($1.84), valuing the company at 71.2 billion rand. They’ve traded in a 52-week range of 17.56 rand to 45.78 rand.