Sibanye-Stillwater updates on strategy, structure, capital allocation, implementation

Sibanye-Stillwater CEO Dr Richard Stewart highlighted this on Thursday, January 29, when he also presented new information on organisational structure, operational and capital allocation detail, and expected implementation outcomes.

The JSE- and New York-listed Sibanye-Stillwater is one of the world’s largest primary producers of platinum, palladium, and rhodium besides being a gold producer. With gold and platinum prices at record highs, the company is in a sweet spot.

“We have three sources of metals that we provide the market. One is our primary mining, the other is our secondary or waste mining, and the third is recycling. Primary mining is the only way you can grow the pie. So that's critical to our strategy. Secondary mining is probably the only form of getting hold of a metal where you can have a net positive environmental impact. These are dumps that have been mined already, sitting on surface, and as we get better at processing, as we get better at extraction, as we get new technologies or economics change, we can extract metals out of those already mined dumps very profitably," Stewart said at the event attended by Mining Weekly.

“When we look at our secondary mining, DRDGOLD remains a strategic priority for us.  We don't manage it. It has its own management team, but that remains very strategic to the business, and then our recycling operations, which are currently being consolidated into a single business, We are evaluating and reevaluating carefully, and some of these have got feasibility studies which are currently being completed.

“When you think about mining companies, we all know the easiest way to reduce your unit costs is to mine more, and we all want to reduce our unit costs when prices drop, which means we mine more when prices drop, you actually end up mining more at lower margins.

“These are the trends that need to be reversed. You actually want to mine more with higher margins and less with lower margins. Do not extract the finite resource when you're making money.

“And how do you tactically get that embedded within your operating psyche, within your planning and within your flexibility? That is resource optimisation, and that is something that we're going to be driving hard going forward.

“Finally, sustainability. I think we again as geologists, as engineers, as miners, regard this as the soft, fluffy stuff that it most certainly is not. We hear people talking about social compacting. This is something we are doing. It's not just something we talk about. Again, the last soft, fluffy stuff, but it's not, are the people of our business. The strength of our tree is our people and continuing to foster a culture of care, a culture of performance, a culture that embraces what I call the Sibanye spirit. The entrepreneurial part of the business is what will enable us to deliver on the strategy," Stewart pointed out.

“Looking at the growth side, the best opportunities we see for growth at the moment is within our own portfolio, and within that portfolio, the highest priority will be at our South African PGM operations. For those who not familiar with these operations, they comprise three separate companies that we acquired and put together, and acquiring contiguous operations was very intentional.

“When we put these operations together, originally, when we acquired them, ranging between about 2016 to 2018, we were able to realise about R3-billion rand a year's worth of synergies.

“That initial round of synergies came from cutting overhead costs and optimising infrastructure, optimising concentrators, etcetera. That was the first round of value that we saw and if we hadn't have done that, I dare say many of these operations would not be around today. Synergy is what made them survive the downturn.

“We have just unlocked a significant amount of resources, UG2 resources mine mechanised that were never previously considered and could not be considered because of mine boundaries. That's the value of putting continuous assets together,” Stewart explained

“Likewise, when we look at Marikana, Marikana came with a rather onerous chrome contract. And again, we look at PGMs, particularly in difficult times, it's often chrome that’s the saviour of those assets. Chrome is what carries it through when PGMs go through down cycles and through extensive engagements with Glencore Merafe JV, by pooling all of our chrome assets, we've been able to come up with a model where we can realise value in Marikana for our chrome a lot quicker. What that's done is give us the confidence to start opening up what I would argue are the best shallow resources in the entire PGM industry.

“These are not depth extensions. These are shallow resources on strike mined from surface in a mechanised way. To put this into perspective, the UG2 reef, which was always the poor sister to the Merensky reef, because it contains rhodium, iridium, lithium and chrome, on our operations has anywhere between a 20% to 30% higher revenue per ton than the Merensky reef.

“These are the orebodies of the future in PGMs, and we’ve got four mechanised projects that we are looking at implementing across our existing operations, not yet looking at the rest of the open area that hasn't been considered.

“The last piece we had to unlock to really optimise the timing of these projects was processing flexibility. We do have our own processing facilities, but we have very recently been able to renew the contract we have with Valterra, and that gives us significant flexibility on the timing and how we can bring these projects to work,”  Stewart added.