Sibanye-Stillwater cuts about 300 US platinum jobs to lower costs

Precious metals producer Sibanye-Stillwater (JSE: SSW)(NYSE: SBSW) said on Wednesday it will proceed with anticipated job cuts at its US platinum-group metals (PGM) operations to lower costs caused by an ongoing decline in prices.

The South African miner noted it was already consulting with labour unions in its home country over operating changes that could impact about 7,000 jobs at PGM and gold mines. 

The company, which earlier this month announced a $500 million convertible bond sale to bolster its balance sheet, has faced headwinds at its US operations beyond issues related to the drop in PGMs, used in catalysts that curb toxic vehicle emissions.

It had to suspend production in March from the lower levels of its Stillwater West mine in Montana following an incident that damaged the shaft infrastructure. The same mine was halted for nearly six weeks last year while the company worked on repairing damage caused after widespread flooding in the western state.

Sibanye-Stillwater said that while US operations had recovered from the stoppage, cost pressures and a reliance on contractors due to a persistent skills shortage in Montana and across the US were likely to keep costs elevated.

As a result, the company will have to let go about 100 employees and approximately 187 contract workers, it said on Wednesday.

“We have taken decisive action to address costs at the US PGM operations, to ensure the sustainability of these long-life operations during a challenging period of lower than anticipated PGM prices,” chief executive officer Neal Froneman said in a statement.

The Johannesburg-based miner said the restructuring is not expected to significantly impact output or recycling operations.

Palladium prices have dropped more than 40% so far this year, particularly hit by weak demand in China, while primary metal platinum is down 13%.

The decline has driven other platinum miners in South Africa to look into reducing their workforce. Impala Platinum Holdings is offering voluntary job cuts, including at its deep-level Rustenburg complex. Anglo American Platinum (Amplats) has also held talks with the government about potential job cuts.

The imminent layoffs will worsen the situation in South Africa, the most developed country in sub-Saharan Africa, where one-third of the workforce is unemployed and only 40% of the 40.7 million people of working age have formal jobs, according to official data.