blog 01 03

Mining giant Sibanye-Stillwater said on Tuesday its gold mines in South Africa had returned to profit in the first quarter of 2023, boosted by record prices for the precious metal and an "appropriate" wage settlement with its workforce.

The company, which also operates platinum group mines in the Rustenburg area and in the US, said its SA gold mines recorded earnings before interest, tax, depreciation and amortisation (ebitda) of R774 million during the quarter ended March 2023. This was a swing from a R680 million loss in the same period in 2022, when the company was hit by a three-month wage strike.

Despite this, group ebitda fell almost 43% to about R7.8 billion, with the decline driven by troubles at its SA platinum group metal operations, as well as about a 19% fall in the rand price of the basket of four PGM metals (4E) it produces.

Its SA 4E production, when excluding third-party purchases of concentrate, fell 8% to 379 791 ounces, primarily due to the ongoing planned closure of a shaft at Kroondal, copper theft-related production disruptions (5 200 ounces), load curtailment (5 120 ounces) and productivity constraints in areas where operations are mining through adverse ground conditions (4 100 ounces). The group said, however, that third-party concentrate purchases more than doubled, and when including this, production was only down 4%.

However, the company got a boost from the dollar gold price breaching record highs in May, which underpinned its status as a hedge against uncertainty. Prices in rand terms rose about 16%, while SA production jumped 46% to just over 200 000 ounces.

The company operates the Beatrix Gold Mines in the Free State, Kloof and Driefontein Mines in Gauteng, as well as the Burnstone Project in the Mpumalanga province.

The glittering gold story has been dampened by the difficult operating environment in the country, chief of which is the shortage of electricity generation capacity and increasing organised crime that has been targeting key infrastructure on which the mining company relies. Sibanye-Stillwater said increasing thefts of copper cables make it difficult to operate its mines.

Sibanye, meanwhile, has been open about the risks in SA and is busy diversifying in terms of both its metals portfolio as well as its geographic footprint.

It has recently received a $700 million loan from the US government to help develop its Rhyolite Ridge lithium-boron joint venture. The Finnish government, through a 20% shareholding in the Keliber lithium refinery project, has backed its support for the battery storage metal. These strategic projects help Sibanye-Stillwater mitigate against the localised structural problems in SA.

Shares in Sibanye were down more than 4% in midday trade on Tuesday, and have lost about 9% so far this year.

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