The Association of Mineworkers and Construction Union’s (Amcu) strike at Sibanye-Stillwater’s gold mines was a complete flop. It rolled on for five months, and its members achieved nothing after the union was forced to sign the same wage agreement that rivals had accepted. At least nine people were killed in violence related to the strike.

Another casualty of the strike was Sibanye’s earnings. The company said on Thursday 29 August that it posted a headline loss of more than R1.2-billion in the six months to end of June compared to a profit of R101-million in the same period in 2018. The work stoppage contributed significantly to this, underscoring the costs associated with protracted industrial action.

Sibanye’s earnings were also hurt by R397-million in costs related to retrenchments at its gold operations. Accounting procedures took a further toll, with a fair value loss of R533-million on US dollar-denominated convertible bonds, an adjustment linked to its rising share price.

The losses related to the strike were partly offset by better financial results from the company’s platinum group metal (PGM) operations in South Africa and the US. Formed in 2013, Sibanye was initially a Gold Fields’ spin-off which took over the latter’s labour-intensive South African bullion operations. It has since branched out into platinum group metals, while the acquisition of the palladium-rich Stillwater mine in the US state of Montana has reduced its exposure to South Africa’s turbulent labour and social environment.

“The results clearly validate the successful strategic commodity and geographical growth and diversification of the group into the PGM sector and internationally, through the acquisition of the Stillwater Mining Company. This diversification continues to provide the company with significant operational flexibility,” Sibanye said.

The company sees a better second half, underpinned by rising gold and PGM prices and provided Amcu does not embark on a wage strike at the company’s platinum operations. Synergies from the Lonmin merger should also begin flowing to Sibanye’s bottom line.

One thing investors will be keen on is a return to dividends. Sibanye was initially a dividend play, mining mature assets that generated cash and did not require a huge investment. But its diversification drive has diverted its dividend flow and last year it cut off the taps after giving more than R4-billion back to shareholders from 2013 to 2017.

CEO Neal Froneman said that with earnings and cash flow expected to pick up steam, there could be a “possible resumption of cash dividends during 2020”. BM