JOHANNESBURG (miningweekly.com) – While the operating environment remains challenging, with macro-economic and geo-political uncertainty persisting, the medium- to long-term view of Sibanye-Stillwater remains largely unchanged on the fundamental outlook for the metals it produces, with the exception of nickel.

The Johannesburg- and New York-listed green metals and gold mining company said it was confident that the price weakness of platinum group metals (PGMs) during 2023 did not signal a structural change in PGM fundamentals, such as that of the nickel market, but was more temporary in nature, Sibanye-Stillwater CEO Neal Froneman said during the company’s results presentation covered by Mining Weekly. (Also watch attached Creamer Media video.)

“And we’re beginning to see increasing signs that support a better demand outlook,” said Froneman.

“We believe that the precipitous decline in PGM prices during the first half of last year was due to a confluence of negative factors and exacerbated by unexpected destocking of inventory which caught the market by surprise, causing increased uncertainty and market anxiety.

“This bearish sentiment was reflected in a significant build-up of speculative short positions in palladium, which also contributed to the price pressure,” Froneman added.

The substantial declines in the prices of most commodities, with the notable exception of gold, and persistent cost inflation, has translated into materially lower earnings and cash flows placing the entire global mining industry under severe financial pressure.

Sibanye’s financial results for the year ended December 31 were similarly impacted by the sudden and sharp decline in PGM and nickel prices.

The 33% year-on-year decline in the average PGM basket prices in particular, resulted in a dramatic fall in the profitability of Stillwater in the US and, to a lesser extent, Sibanye’s South African PGM operations, which remain profitable, while experiencing a 42% decline in the average four-element PGMs basket price resulted in adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) more than halving period-on-period to R5.8-billion for the last six months of last year.

Consequently, group adjusted Ebitda for 2023 fell to R20.6-billion, 50% lower than the R41.1-billion for 2022, which was in itself a 40% decline from record levels of R68.6-billion for 2021, which marked the peak of the commodity price cycle.

The significant decline in metal prices and uncertain outlook, along with specific operational performance factors, also resulted in the recognition of impairments of R47.5-billion, which were a primary driver of the group reporting a loss for 2023 of R37.4-billion compared with a R19-billion profit for 2022.

Sibanye continues to see emerging signals that support its long-held, robust view on PGMs demand including forecast growth of light duty vehicle production over the rest of this decade and recent moderation in battery electric vehicle (BEV) growth rates and accompanying increase in hybrid power-train adoption.

The predicted demise of internal combustion engine vehicles is turning out to appear premature, which is challenging the forecast penetration of BEVs.

Meanwhile, primary supply of PGMs is likely to continue to decline in an inflationary environment with low PGM prices, while recycling supply remains subdued and well below forecasts.