Sibanye counts the cost of three-month strike at gold mines

Sibanye-Stillwater is counting the cost of the debilitating three-month strike last year at its SA gold operations which resulted in billions of rand in lost earnings.     

The group on Tuesday said its profit for 2022 halved to R19bn from R33.8bn reported in 2021. The plunge in profit saw the company slash its final dividend from R7.37bn to R3.5bn.

Sibanye said the industrial action in SA and floods at its Nevada operations in the US “resulted in significantly reduced production from the SA gold and US PGM [platinum group metals] operations during 2022, with a concomitant increase in unit costs”.

“The phased resumption and build-up of safe production after these operational stoppages also negatively impacted production and costs during the second half of the year, resulting in group revenue declining by 20% to R138.3bn for 2022 compared with R172.2bn for 2021,” the company said.

It also reported a 40% decline in adjusted earnings before interest, taxes, depreciation and amortisation to R41bn, but this was still its third highest since listing on the JSE in 2013.

The plunge in earnings was attributed to the SA gold operations recording a R3.5bn loss in adjusted earnings against a positive R5.1bn contribution in 2021. Sibanye said the contribution from the US PGM underground operations also declined, by 47% to R6.3bn.

The group, which is on the verge of taking over New Century in Australia in a deal worth R1.5bn, on Tuesday also continued its public flirtation with Zambian copper mining firm Mopani.

Sibanye CEO Neal Froneman said opportunities to buy an asset such as Mopani are scarce.

“These opportunities do not exclude selective expansion into Africa as part of our Africa Region strategy. We have identified that Zambia, under President [Hakainde] Hichilema’s new leadership, is transforming into an attractive jurisdiction seeking to attract mining capital under a favourable policy environment,” Froneman said.

“While the Zambian mining industry has been devastated through years of poor regulation and neglect, confidence is building that the changes will persist, creating meaningful opportunities for renewal of its mining industry. The intended sale of the Mopani mine is of particular interest, presenting a unique opportunity to secure meaningful production ounces of copper, a key green metal for the low carbon economy, at a favourable entry point in the commodity cycles.”

Commodities trader and miner Glencore, through its subsidiary Carlisla Investments, in 2021 signed an agreement with Zambia’s mining investment arm ZCCM to transfer its 90% interest in Mopani Copper Mines in a deal worth $1.5bn.

“With such opportunities scarce in other parts of the world and greater competition for resources due to perceptions of the risk context, we see diversification of specific commodities and jurisdictions within Africa as a meaningful contributor to growth in our green metals strategy,” Froneman said.

khumalok@businesslive.co.za