PGM miner Sibanye Stillwater, a leading precious metals mining company, announced on Monday that it expects to report a half-year loss due to a significant writedown on its US assets. The company attributed the loss to the declining price of palladium, a key metal used in vehicle exhaust systems to reduce emissions.
The writedown, valued at R7.5 billion ($420 million), reflects the sharp decline in palladium prices, which have fallen 40% in 2023 and an additional 10% this year. The decrease in palladium prices has been driven by the growing adoption of electric vehicles (EVs), which reduces the demand for palladium and other Platinum Group Metals (PGMs).
The company released a trading statement and production update for the six months to the end of June 2024 on Monday, giving investors a glimpse at the company’s challenges. Sibanye said it expects to report a loss per share for H1 2024 of between 250.8 South African cents and 277.2 cents compared with earnings per share (EPS) in the same period last year of 262 cents.
This is more than a 100% decline year-on-year and mainly reflects the R7.5 billion impairment taken at its US-based platinum operations.
This impairment was taken due to lower medium- to long-term forecasted prices for palladium mined in the US, resulting in a decrease in expected future earnings.
Industry-Wide Implications
Sibanye Stillwater’s loss is a harbinger of the challenges facing the PGM industry as EVs gain traction. The decline in palladium prices and demand will likely have far-reaching consequences for mining companies, suppliers, and manufacturers reliant on PGMs (See our report on Global Nickel Prices https://esgfrontiers.org/featured/global-ni-downturn-felt-in-sa/ )
Industry-Wide Concerns
Sibanye’s struggles have been felt in the platinum belt where job losses have escalated amidst the global downturn. Peers Impala Platinum and Northam Platinum have raised concerns about the long-term prospects of South Africa’s platinum industry, citing the metal price slump. The decline in palladium prices, down 40% in 2023 and an additional 10% this year, has left the industry reeling.
Editor: Lloyd Nedohe | ESGFrontiers
