South Africa’s PGM Giant, Sibanye-Stillwater, Takes Bold Steps Amid Economic Headwinds

  • Sibanye-Stillwater Restructuring: The mining company initiates consultations for the restructuring of four SA PGM operation shafts.
  • Economic Challenges: Above-inflation costs and declining PGM prices impact profitability, forcing the restructuring to ensure sustainability.
  • Employee Impact: Potential layoffs affecting 4,095 employees and contractors prompt Sibanye-Stillwater to seek job-saving alternatives in consultations.
Sibanye Stillwater

Sibanye-Stillwater, a prominent player in the South African mining industry, has taken a significant step by announcing its intention to undergo Section 189 consultations for the potential restructuring of four key shafts at its Southern Africa platinum group metal operations (SA PGM operations).

Economic Challenges Impacting the PGM Industry

Sibanye-Stillwater’s decision comes against the backdrop of a series of challenges that have taken a toll on the platinum group metals (PGM) industry. Notably, there have been above-inflation increases in essential cost components, such as electricity and water tariffs, wages, fuel, and other consumables costs over several years. Coupled with these challenges is the recent decline in PGM prices during 2023 year to date (YTD), which has significantly affected the profitability of the global PGM industry.

The Shaft-Specific Issues

The restructuring plan focuses on four specific shafts within the SA PGM operations. Let’s take a closer look at the issues surrounding each of these shafts:

Simunye Shaft: The Planned Closure

The Simunye Shaft ceased its mining operations during Q4 2022 as part of the planned restructuring. Employees who have not been redeployed to other shafts are currently being consulted in accordance with the Section 189A process.

4 Belt (4B) Shaft, Marikana Operation: Depleted Reserves

The 4B Shaft at the Marikana Operation has faced challenges for the past four years. Now, this shaft has depleted its economically extractable reserves and reached the end of its operational life. The closure of the 4B Shaft will be subject to consultations with organized labour representatives and affected non-unionized employees.

Rowland Shaft, Marikana Operation: Persistent Underperformance

The Rowland Shaft, also part of the Marikana Operation, has experienced persistent operational constraints and has only achieved 64% of its planned production YTD. In response to this underperformance, management has proposed a rightsizing of operations. This entails a reduction in the employee complement to ensure the long-term viability of the shaft as an alternative to closure.

Siphumelele Shaft, Rustenburg Operation: Seismic Activity Impact

The Siphumelele Shaft, located at the Rustenburg Operation, has faced significant seismic activity during 2022. Due to safety concerns, access to certain planned production areas has been restricted. As an alternative to closure, the proposed solution is rightsizing the workforce to support the current reduced average annual production forecast. Employees who have not yet been deployed to other shafts and are impacted by the final restructuring will be consulted in accordance with the Section 189A process.

Potential Impact on Employees

It is essential to consider the potential impact of these proposed changes on the workforce. The restructuring and potential shaft closures could potentially affect a total of 4,095 employees and contractors, comprising 3,500 employees and 595 contractors. These numbers include support services employees.

Objectives of Section 189 Consultations

The primary objective of the Section 189 consultations is to address the challenges and changes within the SA PGM operations in a responsible and collaborative manner. These consultations provide a platform for engaged discussions with organized labour and other affected non-unionized employees through their representatives. The central aims of these consultations include:

  1. Minimizing Job Losses: Sibanye-Stillwater is committed to working constructively with affected employees through their representatives to minimize job losses.
  2. Ensuring Long-Term Viability: The company’s goal is to ensure the sustainability of the Rowland and Siphumelele shafts, as these operations are integral to the overall success of the SA PGM operations.
  3. Considering Alternatives: Sibanye-Stillwater, in collaboration with organized labour representatives, has already explored various alternatives in previous Future Forum meetings. They are open to suggestions from affected employees and their representatives during the Section 189A consultation process.

Management’s Commitment

Richard Stewart, Chief Regional Officer, Africa, expressed the company’s commitment to addressing the potential impact of the restructuring, stating, “We do not underestimate the potential impact of any form of restructuring and commit to constructively engaging with affected employees through their representatives in an effort to minimize job losses. Unfortunately, it is imperative that we engage in this process to ensure the sustainability of our SA PGM operations and the benefits and value they bring to multiple stakeholders.”

Next Steps

Sibanye-Stillwater is proceeding with the Section 189 consultations as part of its commitment to addressing the economic challenges and ensuring the long-term sustainability of its SA PGM operations. The company has invited affected employees and their representatives to engage in these consultations, as required by the Labour Relations Act.

The Bigger Picture

The challenges faced by Sibanye-Stillwater are not unique to the company but reflect broader challenges within the PGM industry. Rising operational costs and fluctuating commodity prices have put pressure on the financial sustainability of mining operations, leading to tough decisions like the ones being undertaken by Sibanye-Stillwater.

What the Future Holds

As these consultations progress, stakeholders, including employees and organized labour, will play a crucial role in shaping the future of the SA PGM operations. The ability to adapt to changing market conditions, optimize operations, and ensure the long-term viability of the remaining shafts will be pivotal in securing the industry’s future.

Sibanye-Stillwater’s commitment to open and collaborative consultations provides a platform for all stakeholders to work towards a sustainable future for the company and the industry as a whole.

Conclusion

The initiation of Section 189 consultations by Sibanye-Stillwater represents a significant development in the South African mining industry. It underscores the challenges facing the PGM sector and the determination of the company to address these issues responsibly. As the consultations progress, the industry will be closely watching to see how this process unfolds and the potential outcomes for the affected employees and the long-term sustainability of the SA PGM operations.

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