South Africa-based mining company Sibanye Stillwater (NYSE:SBSW) just announced that it will eliminate nearly 300 jobs from its U.S. division as it restructures its platinum group metals (PGM) business. Apparently, the unit is encountering problems due to a decline in palladium prices. In the wake of the Sibanye Stillwater layoffs, SBSW stock is retreating about 2% today.
Sibanye blamed reduced metals prices for the layoffs. The workforce reduction move will reportedly affect 100 company employees and 187 contractors.
SBSW Stock: Reasons for the Sibanye Stillwater Layoffs
PGM prices have tumbled since the end of 2022 due to worries about the macroeconomic outlook. PGMs, including palladium, are primarily incorporated in vehicles as a means of reducing their emissions. Amid the economic slowdown in China, palladium prices specifically are down “nearly 40% so far this year.” Meanwhile, platinum has retreated 14% in 2023.
With that said, the Sibanye Stillwater layoffs are not expected to meaningfully lower Sibanye’s production of platinum or palladium.
“We have taken decisive action to address costs at the U.S PGM operations, to ensure the sustainability of these long-life operations during a challenging period of lower than anticipated PGM prices,” said CEO Neal Froneman.
What Else Should Investors Know?
Back in late October, Sibanye Stillwater reported that it could lay off more than 4,000 employees involved in its PGM business in South Africa. Since the firm announced those potential Sibanye Stillwater layoffs, shares of SBSW stock have retreated roughly 7%.
Earlier this month, however, Sibanye also disclosed that it would purchase U.S. metals recycler Reldan for $211 million. After announcing the acquisition, Sibanye noted that it would look to sell $500 million of convertible bonds. Last year, Reldan generated $28 million of free cash flow.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
