Sibanye’s interim earnings fell in the six months to the end of June, but its diversified production base – notably gold – helped to shield it from the drubbing that other platinum group metals (PGM) producers have endured. 

“Group adjusted Ebitda of R14.1-billion ($776-million) for H1 2023 was 37% lower than adjusted Ebitda of R22.6-billion ($1.5-billion) for the comparable period in 2022, primarily reflecting the significant decline in PGM prices and regional operational challenges partly offset by the improved performance from the SA gold operations,” the company said.

The company’s interim dividend was R4.28bn, 62% lower than last year.

Markets were not impressed, and this was reflected in a 6.7% fall in the company’s share price on Tuesday.

“I expected this and I’ll tell you why,” CEO Neal Froneman told Business Maverick in an interview.

“We have outperformed our peers but I don’t think our results were good. Our dividend as a yield was low and this says that our share price was probably a little bit too high for that dividend yield. It comes down to earnings… our earnings should have been better.”

The share price was also not helped by the fact that Sibanye cut its guidance for gold, PGM and nickel production in the face of operational challenges and a strike in France, among other factors that it defines as “grey elephants” lumbering across the veld of the global economy.

These metaphorical pachyderms are “highly probable, high impact, yet often ignored global trends, such as climate change causing extreme weather events which are becoming increasingly frequent globally, with severe storms disrupting our US PGM operations in mid-2022 and our New Century tailings operations in Australia in Q1 2023”.

They also include “social discontent – widespread strikes in France causing downtime at our Sandouville nickel refinery in Le Havre during H1 2023 and ongoing community and labour-related disruptions common in South Africa. 

“Moreover, the shortage of critical skills impacting the mining industry globally continues to impact productivity and costs at our US PGM operation, and electricity disruptions and crime (cable theft and illegal mining) have intensified in South Africa.”

Power curtailment in South Africa remains a vexing issue, but like the wider private sector, the company has addressed it head-on.

“The increasing frequency and magnitude of load curtailment posed a significant risk going into 2023. The impact has however been successfully mitigated through the implementation of comprehensive protocols which include, inter alia, re-scheduling energy-intensive activities to lower demand periods and utilising our installed generation capacity at our SA gold operations, with unutilised available capacity at our SA PGM processing operations also providing significant processing flexibility,” Sibanye said. 

Sibanye also now has a pipeline of 600MW of renewable projects planned for commercial operation by 2025/2026.

Grey elephants can also sprout out of the soil in unexpected places. 

Sibanye’s Rhyolite Ridge lithium project in Nevada – a 50/50 JV with Australia’s Ioneer Limited – has hit a snag because of its proximity to buckwheat, a flowering plant endemic to the Silver Peak Range of Esmeralda County, Nevada.

“The Rhyolite Ridge project has been held up because the mine plan actually impinged on the buckwheat and it only occurs in this part of Nevada. So what we’ve managed to do is move the pit to a position where it doesn’t impinge on the buckwheat,” Froneman told Business Maverick.

“So we can solve the problem and we are cultivating the buckwheat to make sure that it doesn’t become extinct.”

“It’s a very significant cost and has probably delayed us about a year to redesign and re-drill potions of the ore body more away from the buckwheat. But the problem is solved and other people are still dealing with things they can’t solve by simply moving their mining operation,” he said.

This is a floral version of the faunal fandango that Gold Fields has faced with a colony of endangered chinchillas at its Salares Norte gold mine project high in the Chilean Andes.

The critters in that case have now forced Gold Fields to consider making one of the two originally planned open pits into an underground operation as it also attempts to resume a relocation project to move the rodents. 

Read more in Daily Maverick: Chinchilla hurdle may drive Gold Fields underground at $1bn Chilean mine

Grey elephants, it seems, come in all shapes and sizes. DM