Sibanye-Stillwater CEO Neal Froneman has warned of ‘inevitable’ lay-offs in South Africa’s platinum group metals (PGMs) sector in the face of prices which have collapsed from record highs two years ago.
Two years ago, South Africa’s PGM producers were raking in record profits from record prices.
In hindsight, the red-hot price rally for the likes of palladium and rhodium may have been a classic case of “irrational exuberance” which saved marginal shafts from the chopping block.
Prices have since crashed back to earth. Combined with surging costs, a perfect storm has been created that, in the view of Sibanye CEO Neal Froneman, will lead to lay-offs.
“The PGM sector, at these basket prices, is probably going to have to go through a restructuring, and not just us. We’re one of the lowest-cost producers, so if we have lossmaking areas, others must as well,” Froneman told Daily Maverick in an interview on the sidelines of the Joburg Mining Indaba organised by Resources 4 Africa.
Asked if he meant potential lay-offs when he said restructuring, Froneman said: “Correct.”
Sibanye is a diversified metals producer with an asset base that includes gold and PGM operations.
“And when I look at our portfolio, we have some shafts which are coming to the end of their lives, some of the Lonmin shafts which we kept open. So it’s a combination of high-cost shafts now becoming loss-making…