By Helen Reid
JOHANNESBURG (Reuters) – South African miner Sibanye-Stillwater may have to slow down expansion plans at its U.S. platinum group metals (PGM) mines due to rising labour costs, its Chief Executive said on Thursday.
Sibanye reported a record annual profit as commodity prices surged. Profit rose by 13% in 2021 to 33.1 billion rand ($2.16 billion) from 29.3 billion rand in the previous year, but inflation was a key concern.
Sibanye’s PGM operations in the United States saw all-in sustaining costs jump by 15% to $1,004 per ounce, as a skills shortage in Montana and high employee attrition rates drove the miner to rely more on higher-cost contract labour.
“We have to change our approach to our expansion plans at Stillwater in the U.S. with a view to making our operations work with the labour that we’ve got,” Froneman said in an interview with Reuters.
He said the company would produce revised plans within a few months.
Asked if that might mean slowing down the expansion, he said: “Absolutely – if there’s a shortage of capacity to fill those positions there’s no point in driving up your cost and extracting the resource in a sub-optimal way.”
In its South Africa operations, costs at Sibanye’s gold operations climbed by 7%, which the company attributed to above-inflation increases in the cost of electricity and some consumables.
Production at Sibanye’s South African PGM operations jumped to 1.9 million ounces, while all-in sustaining costs fell by 5% thanks to synergies from mines being near one another, the company said.
Sibanye said its South African PGM mines would produce between 1.75 million ounces and 1.85 million ounces in 2022, while its South African gold mines would produce between 813,000 ounces and 873,000 ounces.
As fears of a palladium shortage due to sanctions on Russia send prices of the metal to a seven-month high, Froneman said he sees the supply fears being worked out as Russian metals find different markets.
“I think their (Russia’s) supply will move to friendly countries and the Western world will take up the slack that goes elsewhere,” he said.
After a ballot report showed National Union of Mineworks and UASA union members backed a strike at Sibanye’s South African gold operations, Froneman said the company would continue to engage to try and avoid a strike, but would not revise its wage offer.
The Solidarity union split from a coalition of unions on Wednesday by saying it had accepted Sibanye’s final wage offer of a 5% annual pay increase.
($1 = 15.3245 rand)
(Reporting by Helen Reid; Editing by Jacqueline Wong, Sherry Jacob-Phillips, Subhranshu Sahu and James Macharia Chege)
