Still mine: Neal Froneman, chief executive of Sibanye-Stillwater, says that the retrenchments due to the multinational mining company restructuring have been ‘minimal’. Photo: Robert Tshabalala/Gallo Images
Sibanye Stillwater is closing the book on retrenchments at its South African operations, according to chief executive Neal Froneman.
“I think we’ve done the restructuring we need to do in South Africa. We will announce the outcome of that,” Froneman said in an interview with the Mail & Guardian.
“And I think there is a very positive message in that. We always try to minimise retrenchments …
“We’ve been able to restructure in a very positive way, with minimal job losses. And yet we have secured our business under these low prices. We haven’t put our business at risk.”
Froneman added that the company is “basically done” restructuring at the mineworker level.
“There might be a little bit on the overhead side, on the middle management side. But, of course, that is a lot less sensitive.”
In October, Sibanye-Stillwater, South Africa’s biggest mining employer, revealed it was considering closing two end-of-life shafts in its Southern Africa platinum group metal (PGM) operations. Another two would need to be restructured “to achieve sustainable production” after PGM prices took a nosedive.
The proposed restructuring and shaft closures put 4 095 jobs at risk.
Sharply lower commodity prices cast a pall over this year’s Mining Indaba, which took place in Cape Town this week.
PGM miners, who enjoyed a price surge in the pandemic’s aftermath, have been especially hard hit.
Ahead of the indaba’s official opening on Monday, the Minerals Council noted that South African PGM miners are increasingly discussing the need to restructure, a predicament that will put between 4 000 and 7 000 jobs on the line.
Meanwhile, Sibanye-Stillwater has received criticism that its business is overextended — as its investment portfolio, including its ambitious diversification into battery metals, comes up against the commodity price slump.
Froneman disagrees. “We have a very good idea of our ability to spend, when to raise money. But we are not naive,” he said.
“We also understand commodity prices can change. But we’ve got a very strong balance sheet. We’ve got a lot of good-quality projects in the pipeline. And I would argue that any good-quality project, or acquisition, is easy to finance without overextending the company.”
Froneman later added: “As I say to investors, we are not going to drive into a wall at 100 miles per hour. We know how to create value, we know how to use markets to raise money.”
Prior to the restructuring announcement, Morgan Stanley downgraded Sibanye’s stock, citing uncertainty over Froneman’s ability to pull off the same acquisition-led growth that the group enjoyed between 2014 and June last year.
Sibanye’s share price tumbled and currently stands at its lowest level since March 2020. Sibanye, which started out as a gold miner, is now among the most diversified South African outfits, with operations in North America, Australia and Europe. The group’s recent foray into battery metals mining and processing forms part of its efforts to get in on the renewables and electric vehicles boom.
“I think it has been a class-leading strategy. It’s not something we did because it was popular.
“We started it before Covid, which just highlighted the impact of climate change and the need to make sure we don’t have more pandemics,” Froneman said.
“So, the strategy has worked for us … It has created a lot of interest in mining and a recognition that mining is actually not just an extractive industry.”
While lower PGM prices have changed the outlook somewhat, Froneman insists Sibanye’s diversification strategy is still a good one.
“I think it’s not a structural change. It’s a result of geopolitics and concerns around risks. So it will change,” he said.
“It does mean we have to be more careful in how we spend our money because we’ve got less to spend.
“But the strategy hasn’t changed. We will probably implement it slower because it is the only way it will be affordable.”
On whether Sibanye’s pivot has paid off, Froneman said the company hasn’t enjoyed the benefits yet.
“But the one thing that I can tell you is that we won’t end up being a dinosaur,” he added.
“You can be critical of our share price performance and that we’re overextended and that we’ve got more risk than a pure platinum mine. But, you know what, they will cease to exist long before we cease to exist because we are quick-footed. We’re dynamic.
“So, yes, I think there is a lot more benefit to flow-through, but we have seen very little benefit from what we have done so far.”
Froneman has previously spoken about the support Sibanye has received from governments in the other territories it invests in, such as through the Inflation Reduction Act in the US.
This type of support is far more difficult to come by in South Africa, according to Froneman, who has never been one to mince his words about the government’s failures.
“The European Union has a strategy around critical metals. They work with us. They engage with us. They talk about grants. They talk about innovation and tax breaks,” he said.
“In South Africa, it’s all one way. We must give, give, give. And, of course, there is no delivery from government. So, the municipalities where our mines are don’t work.
“We’ve got to fund that and take on an extra cost burden. Crime and corruption is rife. We’ve got to defend our employees and protect ourselves from illegal mining.”
The South African government is all talk on issues such as green hydrogen and critical minerals, Froneman added.
“But there is little action. There is a lack of capacity to deliver. They can’t even keep the lights on. Logistics are a mess. The ports don’t work. Transnet doesn’t work,” he said.
“So, no, it’s this perception that business must give and give.
“But it’s not sustainable under those conditions, which is why we are looking to expand outside of South Africa for now. The investment climate is so bad.”