Sibanye cuts US palladium mines output forecast after floods

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Sibanye Stillwater cut its Montana-based palladium and platinum mines’ output forecast for this year after flooding and operational challenges affected production.

The Johannesburg-based precious metals producer sees output at its Stillwater mines at 445 000 ounces to 460 000 ounces this year amid rising costs and as production takes a hit from floods in the area, Sibanye said in a presentation published on its website on Thursday.

The US mines, which were initially forecast to produce between 550 000 ounces and 580 000 ounces of palladium and platinum, were forced to halt activities for seven weeks after Montana was hit by widespread flooding following a warm spell that led to a rapid melt of snow in the mountains.

Sibanye’s dealmaking Chief Executive Officer Neal Froneman acquired Stillwater Mining Co. for $2.2 billion in 2017. While that deal to diversify away from South Africa paid off as surging metals prices allowed Sibanye to resume paying dividends two years ago and recoup its investments, the Montana mines have lately been plagued by operational challenges worsened by Covid-19 disruptions and skills shortages, the company said.

Palladium and platinum output at the Stillwater mines fell 5.5% to 570 000 ounces last year after a rail collision. While Sibanye still aims to raise output to about 700 000 ounces by 2027, for now its “prudent to defer capital investment on original growth project and re-engineer the operations to protect margins and long-term value,” it said.

The miner said it expects the palladium market to swing into a surplus from the middle of this decade and that future price weakness requires operational repositioning.

© 2022 Bloomberg

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