South African gold mining giant, Sibanye Stillwater, has signed a management agreement with the Glencore Merafe Joint Venture (GMV) to boost chrome production and offset losses from declining platinum group metal (PGM) prices.
This was disclosed in a statement by the company’s outgoing CEO, Neal Froneman, on Wednesday.
He stated that the agreement would immediately enhance cash flow from Sibanye’s South African PGM operations while leveraging cost synergies and operational expertise from GMV.
Sibanye, like other South African miners, has seen a sharp decline in PGM prices, driven by lower demand for palladium and rhodium, key components in vehicle emission control systems.
Meanwhile, chrome, a by product of PGM mining, has remained a strong revenue source due to consistent demand from China’s steel industry.
According to Sibanye, chrome sales in the first half of 2024 generated R3.1 billion ($168.84 million), marking a 42% increase compared to the same period in 2023. The company’s chrome sales volume also rose by 19% to 1.3 million tons.
“This agreement allows us to maximize value from our chrome assets, ensuring stable revenue even as the PGM market faces uncertainty,” Froneman said.
Unlocking greater value from chrome operations
The deal, which builds on a 2011 agreement between GMV and Lonmin (acquired by Sibanye in 2019), will fast track the delivery of contractually required chrome volumes from the Marikana operations.
Initially set to run until 2060, the contract will now be fulfilled by 2033.
To achieve this, Sibanye will allow GMV to ramp up production at its chrome recovery plants (CRPs), including the previously mothballed Roland CRP and the K4 CRP at Marikana.
Additionally, GMV will take over chrome operations at Sibanye’s Kroondal and Rustenburg PGM mines, benefiting from cost efficiencies and increased output.
Sibanye previously projected chrome production to peak at 2.5 million tons in 2024 before declining to 1.5 million tons by 2029.
However, the new agreement is expected to sustain long term chrome output and support future development projects.
“We are excited about this collaboration, as it will not only enhance our revenue streams but also ensure the sustainability of our chrome business,” Froneman added.
Chrome now accounts for 12% of Sibanye’s total revenue, generating significant by-product credits that have helped mitigate losses from the struggling PGM sector.
With this agreement, the company aims to maintain strong earnings from chrome while navigating the challenges in the platinum market.
