Sibanye’s core profit drops by a third in quarter as strike bites

SIBANYE-STILLWATER, a precious metals producer, flagged that its core profit dropped about a third in its first quarter to end-March, as it deals with a wage strike and economic uncertainty.

The group, which said the operating environment during 2022 had been characterised by socio-political and economic uncertainty, saw its share price drop yesterday by almost 8 percent in the morning trade following its release of an operating update for the quarter ended March 31, 2022.

By 5pm the share closed 7.80 percent lower at R49.57.

Sibanye’s first-quarter gold output dropped by 45 percent to about 137 000 ounces as the company deals with a two-month-old strike and safety issues. The company said yesterday it had suspended output guidance for the operations.

Its first-quarter earnings before interest, taxes, depreciation and amortisation fell 31 percent to R13.7 billion amid operational challenges at its US palladium and platinum mines.

Chief executive Neal Froneman said Sibanye’s managed South African gold operations were impacted by various operational disruptions during quarter one 2022.

Froneman said after the notification of strike action and lockout of members of the Association of Mineworkers and Construction Union and the National Union of Mineworkers, following extended wage negotiations, which began in June 2021, operating activities across the South African gold operations ceased from March 9. As such, operating results from the SA gold operations for Q1 2022 were not comparable to previous periods, he said.

The company’s latest offer for the wages of gold workers is a boost of R850 a month, which equates to an increase of 7.8 percent, but the unions want an increase of R1 000 a month. Union members have rejected the latest offer.

“Our final settlement offer is fair, takes into account inflationary living costs, and is in the interests of all stakeholders, and we will not be coerced into an agreement which may compromise the sustainability of the SA gold operations and negatively impact other stakeholders,” Froneman said.

The strike continues.

The group said despite the prevailing global geopolitical uncertainties, precious metal prices had remained robust, albeit with significant volatility, underpinned by a strong operating performance from its South African platinum group metals operations.

“Group adjusted earnings before interest, taxes, depreciation and amortisation of R13.7bn for Q1 2022 was strong, albeit 31 percent lower than for Q1 2021 (which at the time was a record quarterly financial result),” the group said. The Marikana operation continued to deliver consistently good operating results.

Production of 169 102 4E ounces was 3 percent lower year-on-year with production from surface sources down 2 percent to 6 562 4E ounces and underground production was 3 percent lower at 162 540 4E ounces, due to a slower than expected ramp-up in January 2022, Sibanye said.

It said during quarter one 2022 the acquisition of the Sandouville nickel refinery in Le Havre, France, was concluded. Integration of the Sandouville plant had commenced and further detail would be provided in its first half 2022 results.

“Positive progress has also been made at the Keliber project. The Definitive Feasibility Study confirms the robust technical and financial case for the project,” it said.