SIBANYE-Stillwater was prepared to increase its cost cutting exercises were current commodity prices to persist or worsen.
Speaking to BusinessLive, the precious metal miner’s CEO Neal Froneman said: “Unfortunately, that is the scenario we have to seriously consider. It’s very hard to forecast commodity markets and things can change quickly”.
Since September, Sibanye-Stillwater unveiled business restructuring exercises at its South African and US platinum group metal (PGM) facilities as well as at Kloof, a gold mine where resources at a shaft had been exhausted.
The group also has a nickel refinery near Le Havre in France which was losing money following a decline in the nickel price. A base metals reclamation business in Australia, which was lossmaking in the six months ended June, was now making money.
“We have a policy that we don’t run loss-making businesses,” Froneman told BusinessLive. “To protect the broader group and to be sustainable, we will probably have to go through further shaft closures if the prices deteriorate from the current levels.
“I suppose the socioeconomic impact of retrenchments is very hard and heavy, and it’s last thing we want to do.”
Whether commodity prices, especially PGMs, remain as depressed as per current market rulings is debatable, however. Froneman told BusinessLive that metal prices were likely to rise in the next 12 to 18 months amid signs of a peak in the global interest rate hiking cycle, which is likely to be followed by a cut in interest rates.
“We are in an environment in which interest rates have peaked and should be coming down in the next 18 months,” said Froneman. “We can look forward to seeing an improvement in PGM prices, but I don’t think we are going back to where we were a few years ago.
“In terms of the supply, I think there is a large part of the industry that is loss making at current prices. I expect supply to also drop off and investment in capital projects to drop off,” he said.
