Our opinion on the current state of SSWSibanye Stillwater (SSW), under the leadership of Neal Froneman, has embarked on an aggressive expansion strategy, diversifying its portfolio from traditional gold and platinum mining operations in South Africa and America to include base metals and minerals, particularly those essential for "green" technologies like vehicle batteries. Froneman, renowned for his toughness and expertise in the mining sector, has expressed ambitions to double the company's size before his anticipated retirement around 2024/25. This ambition is reflected in the company's strategic acquisitions and investment in minerals such as vanadium, copper, nickel, and lithium, crucial for the burgeoning electric vehicle (EV) market.
The company's proactive measures, including a share buy-back program announced on 1st June 2021 and strategic investments in lithium production through increasing its stake in Finnish producer Keliber to 80% for approximately R7.7 billion on 30th June 2022, underscore its commitment to growth and adaptation to market demands. Further, the acquisition of Reldan, a US-based metals recycler, for $211.5 million on 9th November 2023, highlights Sibanye's expansion into recycling, a key component of sustainable metal supply chains.
Despite these strategic initiatives, Sibanye has faced challenges, including workforce retrenchments and the impact of wage agreements, such as the five-year deal with AMCU at its Kroondal PGM operation announced on 6th November 2023. The company's financial performance for the year ending 31st December 2023, which reported an 18% decrease in revenue and a significant loss of R37.4 billion, reflects the volatile nature of commodity markets and the operational challenges faced by the mining sector.
The issuance of a convertible bond to raise $500 million on 21st November 2023, coupled with a subsequent 20% drop in share price, further exemplifies the financial market's sensitivity to corporate financing strategies and their potential impact on shareholder value. Despite these setbacks, the CEO's confidence in the temporary nature of PGM price weaknesses and the anticipated recovery in demand underscores a positive outlook for the company's core operations.
Given the downward trend in Sibanye's share price since March 2022, largely attributed to falling commodity prices, potential investors are advised to exercise caution. Waiting for a breakout above the downward trendline could offer a more strategic entry point, considering the cyclical nature of commodity markets and the company's ongoing efforts to adapt and grow its diversified mining and processing operations. Sibanye's strategic vision and its execution, particularly in expanding into green metals and recycling, position it as a forward-thinking player in the global mining industry, with potential for recovery and growth as market conditions evolve.
