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Sibanye-Stillwater laments safety backslide

Jun 07 2018 21:05
Sibongile Khumalo

Sibanye-Stillwater is paying an annual interest of about $100m to service the debt it took to finance the acquisition of the US-based platinum producer Stillwater in 2017, the company said on Thursday.

The funds are generated from Stillwater Blitz operations.

The Johannesburg-based firm acquired US platinum miner Stillwater for $2.2bn in 2017, extending its footprint to North America.

Speaking at an investors' meeting in Johannesburg, CEO Neal Froneman said the group’s debt maturity profile has been “carefully restructured”, with major debt repayment only due from mid-2022.

Debt reduction is one of the key challenges facing the diversified mining group which has grown to become the country’s largest gold producer, following years of intense acquisitions.

Froneman also stated that increasing production from its Blitz project will significantly contribute to a reduction in debt.

The company said the platinum sector in the country is still under pressure due to low platinum prices since the 2008 financial crisis, labour disruption and escalating labour costs.

Demand for the precious metal is industry-related, with the jewellery sector showing the smallest contribution of 29%, the same rate as the use of platinum in industrial applications.

The automotive industry led demand at 42%.

In a safety-focused presentation, Froneman, stated that the current year has seen a “regression in safety performance”.

The company has been hit by major underground incidents in recent months, including a seismic event on May 3 which measured 2.5 on the Richter scale on the western side of Driefontein operations. Thirteen workers were trapped underground, and seven died as a result of a stope collapse.

In February, two mineworkers died at another Sibanye-owned mine, while 955 miners were temporarily trapped underground at the firm’s Welkom operation earlier this year.

Froneman dismissed reports that the mining industry is doing nothing to prevent seismic incidents, which are underground earthquakes synonymous with deep-level mining.

'No technology available to predict seismicity'

“There is no technology available to predict seismicity,” said Froneman.

He said there is a need for more education around the causes of seismic events, particularly among union leaders.

The company said there has been an average of 84 seismic events with a magnitude measuring over 2 on the Richter scale between 2013 and 2018. Earthquakes between the 1 to 2 magnitude were much more prevalent.

It said all the incidents which occurred at the mine were investigated and shortcomings addressed.

Sibanye-Stillwater is also in the process of acquiring the financially distressed Lonmin, in a R5.17bn deal expected to be concluded later this year.

The offer is being considered by competition regulators.  

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