SIBANYE STILLWATER: Outlook for the rest of 2022 is significantly improved
Sibanye-Stillwater’s performance for the six-months ended 30 June 2022 (H1 2022) reflects the deterioration in the global economic and political environment during the first half of 2022, and a challenging period for the Group due to significant disruptions experienced at the SA gold and US PGM operations.
Production from the SA gold operations was 63% lower year-on-year, primarily due to industrial action which extended for more than three months, while the US PGM operations reported a 23% decline in 2E PGM production in H1 2022 compared with H1 2021, as a result of ongoing operational constraints and the temporary suspension of operations at the Stillwater mine following severe regional flooding that occurred in Montana from mid-June 2022.
4E PGM production from the SA PGM operations was 8% lower than for H1 2021, but remains well within guidance, with a continued cost management focus and higher by-product credits, resulting in AISC being maintained in line with inflation. This continued focus on cost management has resulted in the SA PGM operations migrating meaningfully down the industry cost curve since they were acquired.
Considering the significant operational disruptions during the period, and the deterioration in the macro-economic environment, the Group’s financial performance for H1 2022 was notable. Group adjusted EBITDA of R22.6 billion (US$1.5 billion) for H1 2022 was only 19% lower than adjusted EBITDA of R28.1 billion (US$1.9 billion) for H2 2021, albeit 44% lower than adjusted EBITDA of R40.5 billion (US$2.8 billion) for the comparable period in 2021. H1 2021 was a record 6-month financial result for the Group by a substantial margin, driven by record PGM basket prices and strong operational performance by all the Group operating segments.
Profit for the period of R12.3 billion (US$803 million) was 51% lower than record profit for H1 2021 of R25.3 billion (US$1.7 billion), but compares favourably with profit achieved for H2 2021 of R8.5 billion (US$544 million), when average precious metals prices were at similar levels.
The acquisition of the Sandouville nickel refinery in Le Havre, France was concluded on 4 February 2022. Sandouville produced 3,499 tonnes of nickel metal, 1,066 tonnes of nickel salts and 113 tonnes of cobalt chloride at an average nickel equivalent sustaining cost of R460,397/tNi (US$29,896/tNi). H1 2022 adjusted EBITDA was US$4 million (R60 million).
Sibanye-Stillwater’s focus remains on growth in these ecosystems. However, the significant increase in battery metal prices since early 2021, has required a more cautious approach to M&A growth. Management believes that a strategy focussed on specific acquisition opportunities make sense both strategically and from a value perspective, such as the increased stake in Keliber and the expected acquisition of 50% in the Rhyolite Ridge project.
With both the SA gold and US PGM operations resuming production from suspended operations during H2 2022, the outlook for the remainder of 2022 is significantly improved. The Group is financially sound, generating positive cash flow, with a robust balance sheet offering significant financial flexibility. We are well positioned both to endure the prevailing economic down-cycle, and also benefit from value opportunities which may eventuate.
