Sibanye-Stillwater US PGM output hit with new setback following shaft accident

Macro image of a one ounce Palladium bar

SIBANYE-Stillwater’s difficulties with platinum group metal (PGM) production from its US mine Stillwater suffered a fresh setback today, albeit not quite on the scale of flash floods in 2022 that halted output for a month.

The group announced that damage sustained to shaft infrastructure from a non-fatal accident at the Montana-based mine would result in less production of between 25,000 to 30,000 2E (platinum/palladium) ounces this year.

Sibanye-Stillwater had forecast PGM output of 500,000 to 535,000 oz for 2023 from Stillwater mine. Production from the operation in 2022 disappointingly fell to 421,133 2E oz following the flooding.

A combination over several years of difficult geology, the impact of Covid-19, and the flooding saw Sibanye-Stillwater re-state its long-term production US PGM forecast, pushing its target to 700,000 2E oz/year to 2027. This latest event will do little to calm shareholder nerves that Sibanye-Stillwater has put its US mine’s problems behind it.

Sibanye-Stillwater said the accident occurred during scheduled “non-routine maintenance” of a shaft winder which services the vertical shaft accessing deeper levels of the Stillwater West mine.┬áThe incident – which is the subject of an investigation – resulted in structural damage to the shaft headgear, winder house and winder rope. There were no injuries as a result of the accident, it said.

“The damage to the shaft infrastructure will require remediation, and access to the deeper levels of the mine will be impacted while remediation is underway,” said Sibanye-Stillwater in its announcement.

Access to the upper levels (above 50 level) of the Stillwater West mine and the Stillwater East mine (through the east portal) were unaffected. “Production from these areas, as well as from the East Boulder mine, will continue.”

The flood event in June last year affected Stillwater East Boulder mine, equal to about 60% of the entire complex production.

Sibanye-Stillwater endured a tough operational year in its 2022 financial year with gold production also heavily affected. A three-month strike by unions saw its gold mining division lose R3.5bn in Ebitda compared to a profit of R5.1bn in 2021. Nickel production from the group’s European facilities was also below capacity.

At least the South African PGM operations have performed reasonably well. It has guided to PGM output of between 1.7 to 1.8 million 4E oz at AISC of R20,800/4E oz and R21,000/4E oz from South Africa. This compares to 1.73m 4E oz in 2022.