Sibanye may cut even more jobs in South Africa

Sibanye-Stillwater CEO Neal Froneman said the mining giant could face more cost-cutting measures and closures if commodity prices deteriorate further.

To run the company sustainably, Froneman told Business Day that there could be more shaft closures and, therefore, more job losses.

This comes after Sibanye – a predominantly gold and platinum group metals (PGM) miner – announced in October that it plans to restructure four of its shafts in South Africa, risking thousands of jobs.

The company said above-inflation increases in key cost components such as electricity, water, wages, and fuel – combined with the recent decline in PGM prices – have significantly impacted the global PGM industry’s profitability, including Sibanye-Stillwater’s South Africa operations. 

It said certain operating shafts are now loss-making and pose a risk to the sustainability of the remaining operations.

Therefore, the company said it would enter into discussions with organised labour and other affected non-unionised employees through their representatives regarding the possible restructuring of four shafts at its Southern Africa PGM operations. 

The proposed restructuring and shaft closures could potentially affect 4,095 employees and contractors – 3,500 employees and 595 contractors – including support services employees.

“We certainly can’t run unprofitable shafts, and our cost structure is probably the lowest in the industry,” said Froneman. 

“So if we have loss-making shafts, of which we have a few, they will have to be closed, and I say this with all the sensitivities on potential job losses.”

Sibanye CEO Neal Froneman

Froneman reiterated this point in an interview with Business Day.

“Unfortunately, that is the scenario we have to seriously consider. It’s very hard to forecast commodity markets, and things can change quickly,” Froneman said.

“We have a policy that we don’t run loss-making businesses. To protect the broader group and to be sustainable, we will probably have to go through further shaft closures if the prices deteriorate from the current levels.” 

“I suppose the socioeconomic impact of retrenchments is very hard and heavy, and it’s the last thing we want to do.”

It is not only Sibanye’s South African operations that have come under pressure from low commodity prices.

The company has also announced plans to restructure its US PGM operations to lower costs after palladium prices slumped this year.

The US restructuring will affect about 100 employees, plus approximately 187 contract workers.

Sibanye is also not the only miner to have turned to job cuts to lower costs and maintain profitability.

In October, mining giant Anglo American also announced that it had begun cutting jobs at its head office in South Africa. Around 181 jobs could be lost in this process.

Afriforesight’s head of PGMs and chief sustainability officer, Deborah Chikukwa, told Business Day TV that PGM miners currently face a myriad of challenges

At the forefront of these challenges is the impact of a global economic slowdown, which has decreased the demand for PGMs, particularly platinum, palladium, and rhodium. 

This lower demand has been particularly prevalent in the automotive and industrial sectors and has, therefore, caused a noticeable decline in PGM prices. 

Chikukwa said the correlation between global growth concerns, high interest rates, and subdued demand, particularly in the auto industry, contributed to the sector’s ongoing price constraints.