Production in Montana is set to halt for four weeks.

PGMs production is expected to decrease by a maximum of 30 000 2Eoz.

Montana operations constitute 60% of Sibanye’s PGMs in USA

Harare- The diversified mining corporate, a parent company to Mimosa mine in Zimbabwe, Sibanye Stillwater’s 2023 PGMs production in Montana will halt for four weeks after the western mine succumbed to a machine breakdown at a cost of 25,000 2Eoz to 30,000 2Eoz less production for the year.

Montana operations constitute 60% of Sibanye’s PGMs production in the United States of America. 

“The damage to the shaft infrastructure will require remediation, and access to the deeper levels of the mine will be impacted while remediation is underway,” the Group said in a circular. 

“Further guidance will be provided once shaft repair schedules are finalised and production schedules have been fully optimised given current shaft constraints,” the group added.

This is a major blow to the group’s PGMs operations as supply from South Africa is at risk due to ongoing load curtailment by Eskom and the worsening operating environment exacerbated by cable theft and crime. At the same time, Russian supply is also expected to scale back, with Norilsk Nickel already indicating lower production for 2023 and delays to its projects as access to capital equipment and spare parts becomes more challenging due to sanctions, resulting in increased unavailability of equipment. 

Further to that, since 2018, USA PGMs operations have been succumbing to persistent skills shortages, severely restricted operational flexibility and productivity, significantly affecting production and costs to date. 

3E PGM production for the US PGM recycling operations is forecast to be between 450,000 and 500,000 while 2E PGM production for 2023 was projected between 500,000 2Eoz and 535,000 2Eoz, with all in-sustaining costs (AISC) of between US$1,400/2Eoz to US$1,500/2Eoz. Capital expenditure was forecast to be between US$285 million and US$300 million, including approximately US$25 million in project capital. 

In South Africa’s operations, the 4E PGM production forecast was estimated between 1.7M 4Eoz and 1.8M 4Eoz including approximately 60,000 4Eoz of third-party PoC, with AISC between R20,800/4Eoz and R21,800/4Eoz while capital expenditure was forecast at R5.4 billion including project capital of R920 million on the K4 project.

However, the production targets are likely to be grossly missed for all PGMs operations due to the latest setback in the USA which is further exacerbated by shortages of equipment courtesy of Russian sanctions and a turmoil operating environment in South Africa due to cable thefts, erratic power supply from ESKOM and high crime rate. 

Projected all-in-sustaining costs and capital expenditure are further set to soar as more capital will be injected into the fixing of the machine. 

In FY2022, the group recorded its first profit and production downtick post-COVID-19 pandemic era mainly due to a reasoning deficit on workers’ pleas that resulted in a 3 months industrial action. Gold production dampened while PGMS production was also curtailed by flooding in Montana that suspended production for seven weeks. 

In 2022, due to unprecedented industrial action, floods, high crime rates and power outages, capital expenditure increased by 34% year-on-year to R5.1 billion (US$312 million), exceeding guidance of R4.8 billion (US$320 million) with ore reserve development by 35% higher at R2.1billion (US$130 million), sustaining capital 2% higher at R2.1 billion (US$126 million) and project spend increasing from R203 million (US$14 million) in 2021 to R925 million (US$57 million).

Capital expenditure also exceeded guidance by 7% or R328 million (US$8 million below) as a result of bringing forward the planned expenditure incurred on the No. 1 furnace rebuild project at Marikana and trackless mobile equipment (TMM) at Kroondal and Rustenburg operations, which was originally scheduled for 2023.

Sibanye-Stillwater has established itself as one of the world’s largest primary producers of platinum, palladium, and rhodium and is a top-tier gold producer. It also produces and refines iridium and ruthenium, nickel, chrome, copper and cobalt. 

The Group has also tapped into battery metals mining and processing and is increasing its presence in the circular economy by growing and diversifying its recycling and tailings reprocessing operations globally. 

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