Sibanye-Stillwater CEO Neal Froneman told the PGMs Industry Day conference in Johannesburg yesterday that mobility remained the biggest driver of platinum group metal (PGM) demand.
Froneman also said that understanding how battery electric vehicles (BEV) would replace internal combustion engines (ICE) was key to understanding the dynamics of the industry.
“Mobility plays a significant role in supply and demand. We need to focus on people and their preferences. New technologies, such as hydrogen-powered engines, are becoming more viable and are being developed by companies like Toyota,” Froneman said.
“In addition, we must consider the impact of virtual work on mobility as there will be less demand for mobility going forward. In the first quarter Tesla reported a 9% year-on-year decline in sales, which was the first decline since 2012.
“We as Sibanye are following Noah’s advice and building an ark to weather the storm.”
Froneman said he expected hybrids to play an increasing role in the new vehicle market as they addressed range anxiety and recharging infrastructure issues.
In his view, smart software that allows the efficient use of electric cars with internal combustion engines will drive the market, while the emphasis on decarbonising and the energy transition will provide a significant underpinning to demand.
Froneman said one should view PGMs as industrial metals rather than precious metals and creating new demand in the industrial space was the way the industry should move going forward.
“At the operational shaft level, our restructuring is done as the South African PGM mines were cash flow positive, as Sibanye-Stillwater had moved very early to take out loss-making production,” he said.
Sibanye-Stillwater’s chief regional officer for Africa, Richard Stewart, echoed Froneman’s comments by saying that building the ark and focusing on cost-cutting by being smarter was one of the ways that the PGM industry would survive the current low platinum prices.
“We have saved R800 million recently, and if we continue to realise those kind of savings going forward that amounts to more than R2 billion over the next five years,” Stewart said.
He also expected companies to share their assets just as the gold mining industry did in the 1990s.
“One of the most interesting models we’ve seen is what was called a pool and share agreement. Fundamentally, what happened was that two companies got together, put together a whole bunch of assets but never sold them,” Stewart said.
“They still owned their own individual assets but operated them together, and therefore shared in those synergies and realised assets that would have otherwise remained dormant.”
He also noted that sharing assets, including infrastructure, would reduce fixed costs and help mines move down the cost curve.
“Looking at capital, future mixes and overall production, I think there are some real opportunities. If we came together, there could be value that’s created for the industry that we could share as industry players,” he added.
Stewart noted that there was further room to optimise the value chain through creating symbiotic relationships with other industry players.
BUSINESS REPORT