Welcome ladies and gentlemen to Commodity- TV and a new edition of our online interview series. We want to get an update from Sibanye-Stillwater, world's largest platinum palladium producer and number three gold producer in the world. James Wellsted is here with us, the Executive Vice President of Investor Relations and Corporate Affairs of the company. Good morning, James, to South Africa. How are you? Morning, Jochen. Very well, thank you. Yourself? Yeah, thank you. All fine so far, all good. Yeah, I'm a shareholder of the company, long-term shareholder. I have to disclose that upfront of course, and also the company is part of the SRC Mining & Special Situations Certificate. Yeah, well, Sibanye-Stillwater, great company. You just celebrated, I think, your 10th anniversary, if I'm correct, yeah? Yes, this year. That's us. Yeah. What you have achieved in 10 years is really outstanding. Let's talk a little bit about first on 2022, because I think it was another year, which was in some parts, not so easy for you. You had that big flooding in Montana. I think you had again, some strike actions. Please comment a bit on 2022. Thank you, Jochen. It was a challenging year in some aspects. I mean, you know, there were some external factors which presented quite significant challenges, not only for ourselves, but for the entire mining industry. Obviously, as you know, those are macroeconomic issues, concerns about a slowdown, further slowdown in the global economy, rising interest rates and inflation pressures that are affecting companies worldwide, skill shortages which we've had to deal with, and then also obviously the political situation in Ukraine. That's added quite a lot of complexity to the operating environment. We also experienced external events like the one in 500 year flooding in Montana, which affected the whole region, and actually, as you said, resulted in access to our Stillwater mine being affected. We couldn't get people in and out of the operations. Even though our infrastructure was not damaged itself, the roads and the bridges were damaged. As a result, we lost seven weeks of production at that mine, which accounts for about 60% of our US PGM production. It then took us another, up until November, to really rebuild the production back to normal levels. That was quite a significant change, which impacted or event which impacted our U.S. operations. We also restructured those operations or really repositioned them for lower palladium prices, which we now expect going forward. You know, we've got more positive outlook on platinum and rhodium. Mm-hmm. Certainly palladium, I think we believe is going to be under a little bit more pressure than it might have been a couple of years back. Why, why is this? Why is this? Why is this with palladium? Why do you think? It's mainly because, well, it's partly because of the increased substitution that we're seeing of platinum with palladium in gasoline auto catalysts. Okay. If you remember that gasoline internal combustion engines primarily use palladium as the catalyst, and then the diesel vehicles primarily use platinum. What had happened in the past is there'd been a shift from diesel towards gasoline internal combustion engine vehicles after the Volkswagen Dieselgate Scandal that happened in 2015, which pushed the palladium price up significantly. In 2020, BASF developed what they call a Tri-Metal Catalyst, which allows for substitution of that palladium with platinum. You know, we're seeing that coming through, and it does mean that by about 2025, it'll mean about 1.2 million ounces of less palladium demand and increased platinum demand. You win on one side but less on the other. In the U.S., our U.S. operation is mainly a palladium mine, and as such, we've restructured it in that way. The other event that impacted quite significantly was the gold strike, which was unfortunate, but we had to take a position with the unions. They were demanding well above inflation increases, which would have then fed through into our wage negotiations at our PGM operations in South Africa. We decided to take a stand and, you know, as we've done at our U.S. operations, try and get a more inflation-linked agreement, which then creates more sustainability of the operations. We were successful in doing that, but it did mean we had to take a three-month strike, and that meant that most of the first half of the year we produced very little gold. We also had to build up production in the second half of the year, which we achieved by about October, November. Both the U.S. PGM and S.A. Gold operations were very severely disrupted. Going into 2023, we obviously expect a much better. They're now at normal production levels, so we should see a much more stable operating performance with improved production, improved revenue, and lower costs from those operations. Okay, super. That means that the outlook is much more on the positive side, I would say. First of all, for the profit, for the net earnings, but also maybe for the dividend, because we saw quite a dividend cut compared to 2021. I think despite your disruptions, you guys still did well on the cash flow side, right? That's correct, Jochen. Yeah. I mean, 2021 was by far a record for the company. You know, we had very, very high PGM prices due to various supply constraints, et cetera. With Norilsk flooding and then Anglo Platinum having their problems with their concentrators or their processing division. Prices were very, very elevated, and that pushed us to record levels of profitability in 2021. We were always going to struggle to replicate that performance this year, particularly with the disruptions we had. Overall, we were free cash flow positive, and in fact, we managed to maintain our positive cash position on our balance sheet for 2021, which is very good positive from a future perspective. It puts us in a very strong position, going forward in terms of obviously re-rewarding shareholders, but also growing the business in a value-accretive way. Mm-hmm. Because of that positive cash flow, we were able to pay at the upper end of our dividend policy again. It was lower than 2021, but it still was a 6% dividend yield for the year, which is well above most of our gold and PGM peers in the industry. Yeah, definitely. No, I really enjoyed that too. I think the payout is the end of the month, right? That's correct. That's good. We cash flow in my pocket. Great. Let's talk shortly about safety, because I think you guys have also improved massively on the safety, right? Yes. That's correct. We did have a regression in safety last year, and particularly in fatalities, which was very concerning and tragic for the business. Mm-hmm. We had 21 fatalities last year. It actually replicated what we saw across the industry. We're not 100% sure, but we do think it may have something to do with coming out of COVID. You know, teams not being used to working together, et cetera. Nonetheless, we put a very, very significant focus on safety in the middle of last year, and we started to see those improvements... Sorry, in 2021. We started to see those improvements coming through towards the end of the year. That continued in 2022. We saw further improvements over 20% plus in most of the safety metrics that we measure. Most importantly was on the fatality side. We had a significant reduction, 75% reduction in fatal incidents, with five fatalities for the year compared to 21 the previous year. Mm-hmm. Obviously, five is still five too many. It does give us a lot of confidence or, or hope that, you know, we are doing the right things and that we will be able to advance on this or progress on the safety performance and get closer to our goal of zero harm in the workplace. You know, we're not quite there, but certainly we've made very, very big strides in improving safety. Okay, super. You were also, you were already talking about the strike last year. How long is the wage contract now running? Meaning, do we have to, yeah, face maybe again a strike this year, or have you done that over several years? Yeah. We've got one negotiation this year at our Kroondal operation at the PGM operations. Mm-hmm. I think given that, and again, as I said, you know, the gold strike was a precursor to our PGM wage negotiations last year. What we achieved there was a historic outcome for our business and for the industry, in fact, because a lot of our peers also achieved the same outcomes. Was a five-year inflation-linked agreement. What that means is previously we had three-year agreements, and they were timed consecutively with gold. It was one year after our gold operations. What we had experienced was that we'd be negotiating gold one year, we'd have that strike like we did last year, and then you'd go into PGM wage negotiations. That causes a lot of uncertainty and disruption in the business. Now we've locked in five years inflation linked. We know what the cost impact is gonna be each year. Mm-hmm. It buys us essentially five years of relative peace and stability at those operations. Which is going to be incredibly important for positioning going forward, 'cause these are the biggest profit generators in our business. Okay. Let's talk about future profit centers, because I find it really interesting that you guys are moving a bit away from the precious metal side, moving into the battery metal side. I think last year was very important for you because you own now 85% of Keliber, and the construction of the lithium refinery has started. Also in addition, Sandouville Eramet you board with the nickel refinery that is also producing already positive contributions to your business. Please give us a bit more insight onto those two operations, because I think those are, yeah, within the next 12-18 months is becoming very important for you, right? Yeah. We had started looking at battery metals as an opportunity, you know, prior to 2017. It was really when we got into the PGM space. In 2019, we acquired a research group called SFA (Oxford) who did a lot of work on understanding the battery chemistry, the evolution of the battery and electric mobility, and then which metals were gonna be critical to that future. We identified obviously, you know, the ones that everyone knows about lithium, nickel, cobalt, which is in difficult areas, so we struggled to get in there. Certainly copper, et cetera, of interest to us. In 2021, we were able to make quite significant moves into the battery metal space. We did four transactions into the green metals environment. We did Sandouville in France. We acquired a 30% stake in Keliber in Finland, which is a lithium project. We acquired an option to do a JV in the U.S. in Nevada called Rhyolite Ridge, which will be another significant lithium project. Then we bought a tailings dam reprocessing stake in Australia in a business called New Century. Mm-hmm. Which we've now acquired control of. Keliber, you know, that's the one that you mentioned. We recently increased our shareholding from the initial 30% that we bought to about 85%. We reduced the number of minority shareholders from 114 to 10, and that allowed us now to then progress with that project. We got permitting for the refinery, the lithium hydroxide refinery, which we have the board's approved the project and we started the construction of that refinery in Kokkola in Finland, which is very, very close to the European ports and is of strategic significance. We've recently received a permit for the concentrator and the second mine that we will be developing to feed that refinery. We're busy with that process, but it's very exciting. It means that we should be producing our own lithium hydroxide delivering into the European environment by about 2025, 2026, about 15,000 tons of lithium. Certainly, as you say, I mean, if the lithium prices stay where they are or, you know, even at the kind of prices that we've seen in the last two years. Mm-hmm. These are gonna be very, very positive contributions to our profit over the next 5-10 years. Mm-hmm. What cost per ton do you expect approximately? Listen, we use much more conservative prices. When we bought the first 30% stake in Keliber, the lithium price was about $13,000 per ton. We're using about $26,000-$27,000 per ton for our valuation purposes. Mm-hmm. Our planning, it's been sitting at around $60,000-$70,000 per ton. Some of the analysts have remarked actually that if Keliber, I mean, if the price stays where it is now, $60,000 per ton, there is a bit of a pullback at the moment. Mm-hmm. If it stays at those kind of levels, Keliber will be actually worth more than our market cap at the moment. Crazy. Okay. I gotta buy more shares. Honestly, I really see it like that. I think it's a healthy correction in the lithium market because it was overheated definitely. I think in the long term, $50,000-$60,000 per ton, I think it's a no-brainer because the demand is there, but not the supply. Yeah. That's exactly the problem. I mean, it took us 10 years to permit Keliber, in Finland. Yeah. What we're seeing around the world is similar situation, where just the time to get these operations permitted and into production is so long. We've got a chart in our results which, if people wanna go and have a look at our results presentation on our website, which shows that what we're seeing at the moment is that there were a couple of brownfields expansions in Australia, Chile, et cetera, which has brought on some supply, which will mean that there's more balance in the market for the next year or two, and we expect lithium prices to come back. Beyond that, for the demand that's been projected for battery EV, electric vehicles, projection or entering the global auto sector, we're gonna need a lot more new projects being brought online to fill that demand gap. We just don't see those projects. You know, the risk is much more skewed on the supply side. In our view, there's gonna be a significant deficit from about 2026 onwards, and that means that prices are gonna be elevated. Not only battery metals or lithium, but also it means that there's not gonna be the penetration of battery electric vehicles that people have been kind of forecasting is not gonna be possible. Which me ans that the internal combustion engine vehicles are going to persist for longer, which means greater demand for our PGMs as well. For us, it's a win-win. You know, we'll win on pricing on the battery metals, but we'll also win on greater demand on the PGM side because of the supply issues that are bound to happen. Absolutely. That means you're on the right business. We hope that we can be. Let's talk shortly about Nickel. Sandouville, the nickel refinery you bought from Eramet. I have the feeling that is also something really for the future because we were talking, I think it was last year, about battery recycling, and that is something which will come online. I could imagine within the next three to four years when the first wave of the e-cars maybe are coming back because the battery's down, is below those, these 80% levels. What is going there with the battery recycling? Because I think this is also part of the future game, recycling definitely, because we need the raw materials. If we look at the environment, it makes much more sense to recycle than to maybe build a new mine when possible. I think I have the feeling your thinking is really correct. On one hand, you have a mining business, but also you have a recycling business like with the, with the other candidates you have already. How is it going with the battery recycling, and how is it going with the nickel refinery itself? Because I saw on your balance sheet it's really contributing now, and I could imagine you wanna grow the business. It contributed in the First half of the year. Unfortunately, Second half of the year with the, you know, higher input prices, you know, European, the gas prices were a lot higher. We had some disruptions at our plants. Remember we acquired it from Eramet in February last year. We've been integrating the business. We do have to spend a bit more capital because it's been an unloved asset in the Eramet for some years. What we are trying to do at the moment is get the existing facility back to profitability and on a sustainable basis. That will take one or two years to get there. In the meantime, we're also looking at the feasibility of a PGM recycling business at that facility. Also, as you said, first of all, battery metal refinery to produce nickel sulfate for the growing battery metal industry in Europe and particularly France. We've aligned with Verkor, for instance, which is gonna be building the first gigafactory in France. The idea is to try and, you know, align our product with what their demand is gonna be with the chemistry that they're going to be building their batteries with. Also, build a relationship so you can start to process some of the waste from that battery metal production as your recycling, your initial recycling. That will obviously get built on through batteries t hat are recycled at the end of their lives. We are trying to position ourselves at the moment. As you say, it will take a little bit more time before we get there. We've got to do the studies, but certainly in the next three to four years, we'd expect to have some very, you know, positive moves in terms of that. Okay, super. We were talking now about precious metals, battery metals, but I think one metal we missed so far. I saw an interview with Pierre Lassonde. He has the same opinion as I have, copper $7 per pound. Yeah. I found it really interesting because I had the feeling I'm the only one seeing that. But if Pierre Lassonde sees it the same way, it looks like that I'm on the right path. But the thing is to me, is copper something you would maybe pursue in the future, a bit more harder and, let's say, put more the focus on? Is that something you could imagine? Copper is certainly of interest to us. It's been a much more competitive in industry than or sector than what we've already moved into. You know, you've got a lot of big players, a lot of the big diversified players already involved in the copper market, as you know. As you know, they've also had some issues in South America, with some of the copper mines, existing mines and the expansions. Where we see an opportunity, and our CEO, Neal Froneman, has spoken about it, is potentially in Africa, in Zambia, particularly, where the, you know, historically a very famous copper belt, which has not been developed adequately over the last couple of years due to various factors relating political factors and others. There's a new government in place, a new president, and they're very, they think very economically or commercially and are trying to attract investments into the country and to try and reinvigorate that industry. At the moment, there are processes underway, with some of the mines, you know, Mimosa, Konkola. Sorry, Konkola Copper Mines. Mm-hmm. which was a Vedanta mine, et cetera, which are now being looked at again. There are processes underway with government to try and find new operators for these operations. We are obviously participating in that process. It's still quite early days, but we do think we've got a very strong case because of our deep level mining experience, being located in Africa and operating in the African environment. We think that we can make very good partner for the Zambian government in those operations. Okay, super. Well, it sounds like good game plan. Okay, for the end, very interesting for us shareholders is of course, if you expect higher profits this year, how are we gonna benefit? Higher dividend share buyback? Listen, our dividend is obviously very important to us. We want to maintain a leading dividend. We do see, you know, unless there's a significant collapse in the precious metals prices, which we don't foresee at all. We've got the benefit, obviously, of the rand in South Africa that does tend to weaken when the dollar is strong. It does offset those kind of movements in gold and PGM prices. We're actually still experiencing 50% plus adjusted EBITDA margins at our SAPGM operations. As I said with our gold operations, you know, we were 50% down in terms of production last year. That will recover back to normal or it has recovered back to normal levels. The USPGM operations will be back at normal levels again in 2023. We're expecting a much stronger performance this year. With current prices, we should see quite a strong recovery in our earnings as well, and that would support a higher dividend and cash flows. Obviously, further returns to shareholders, I think the board will have to consider at the time, depending on the prevailing environment, the economic outlook, political environment. Certainly it's something that we have committed to, is to continue to return value to all stakeholders. Super. All right, James, thank you very much for the, yeah, 25-minute update. Fantastic. Yeah, definitely I will consider to buy some more shares, that is for sure, because I think you guys are on the right businesses and you are expanding into the right metals. I really like that. Yeah, I wish you all the best. Thank you very much and hope to see you soon. Thank you. Thanks very much. Thank you. Yeah. Ladies and gentlemen, that was James Wellsted, the Executive Vice President, Investor Relations and Corporate Affairs of Sibanye-Stillwater. You heard it, last year it was a challenging year with the super flooding in Montana on their PGM production there. Also they had this big strike and they solved everything in a very, very fine way. Now they have a five-year wage agreement, which makes it really calculable for the foreseen future here. That is on the one hand, fantastic. On the other hand, I really like the expansion into the battery metals, especially with Keliber, with Sandouville, but also with the Ioneer project in the U.S. Those things are really look very, very promising. I could also mention, like James said, higher margins for this year, better the prices stay hopefully at least stable, maybe move higher, but also improving margins and that means higher dividend and maybe some share buybacks. We will see. Definitely stock price is too low. You should really check on Sibanye-Stillwater. Thanks for watching us, and bye-bye for this time.