Sibanye-Stillwater has received a major boost from the United States after the release of new regulations offering incentives for the mining of critical minerals, including palladium and platinum.
These incentives, part of the Inflation Reduction Act’s (IRA) Section 45X, now provide a 10% ‘Advanced Manufacturing Production’ credit. Previously, the Act limited these benefits to refiners, but recent amendments now include miners.
“We welcome the changes to Section 45X by the U.S. Treasury and appreciate its foresight in understanding our industry,” said Sibanye-Stillwater CEO Neal Froneman. He expressed optimism that the legislation would bolster the mining and processing of critical minerals in the U.S., supporting the growth of the regional value chain.
Froneman emphasized that these regulations would provide much-needed financial relief for Sibanye-Stillwater’s U.S. platinum group metals (PGM) operations, which have faced challenges in recent months. A 28% decline in the rand 4E PGM basket price and a 30% drop in the U.S. dollar 2E PGM basket price have resulted in a reduction of 200,000 ounces in annual output at its Stillwater palladium and platinum mine.
For the first half of 2023, Stillwater produced 238,139 ounces of 2E (up from 205,513 ounces in H1 2022) at an all-in sustaining cost (AISC) of $1,343 per ounce, compared to $1,737 per ounce in the previous year.
Last year, the company postponed an expansion at Stillwater to reach a target of 700,000 ounces per year and instead set a new production target of 440,000 to 460,000 ounces for 2024.
Additionally, IRA incentives also apply to lithium production, aligning with the U.S. government’s recent environmental approval for the Rhyolite Ridge lithium/boron mine, where Sibanye-Stillwater has an investment option. The company plans to complete a feasibility study before deciding whether to invest $490 million for a 50% stake in the project.
The U.S. Bureau of Land Management backed the Rhyolite Ridge project with its final environmental impact statement issued in September.
Sibanye-Stillwater also saw a short-term rise in palladium prices after reports surfaced that the U.S. had urged G7 allies to consider sanctions on Russian exports of palladium and titanium. Palladium futures hit $1,173 per ounce, the highest level this year, boosting Sibanye-Stillwater’s shares by nearly 8% this week.
