BILLINGS — It was a tough start of the year for Stillwater Sibanye, which owns Montana's largest hard rock mines, but the company's CEO is pleased with the performance of his Treasure State properties two years after purchasing them.
The company reported Thursday a loss of 54 cents per share for the first six months of 2019, a steep drop from the 4-cent-per-share gain for the end of last year. A lengthy strike at the company's South African mine was largely to blame, costing the company $100 million in lost revenue, according to Sibanye Stillwater officials.
Nevertheless, CEO Neal Froneman was upbeat about his company's fortunes, particularly in Montana, during a Thursday interview at the Q2 studio in Billings.
Two years after his company, then called Sibanye Gold, bought Stillwater Mining Co. for $2.2 billion, prices for one its chief commodities, palladium, has doubled and value of Stillwater assets nearly tripled, according to Froneman.
"This acquisition has been one of the best we've made," he said.
Froneman, who lives in South Africa, was in Montana this week for a company board meeting. He also held Sibanye Stillwater's earnings call with investors in Billings.
Sibanye Stillwater owns two mines in the Beartooth foothills, the main Stillwater mine near Nye and the East Boulder mine south of Big Timber. The company also operates a recycling smelter in Columbus.
The two mines are North America's largest source for palladium and platinum, which are used to make catalytic converters in vehicles, jewelry and other goods.
In the first six months of 2019, production at those two Montana mines fell about 3 percent in June compared to last summer, and it's taken a larger dive- 4.6 percent- compared to the end of 2018, the company reported in its earnings call.
A slow down of production at Bliz expansion, a $250 million effort to extend the life of the main Stillwater mine by 30 years, is partially to blame, Froneman said. Difficult ground conditions have forced workers to install rope anchors and use other methods to ensure safety, he said.
It's an "interim problem" that Froneman expects won't last long term. In fact, Sibanye Stillwater still anticipates boosting its employees in Montana from the current 1,600 to nearly 2,000 within the next few years, largely to accommodate the extra work at Blitz.
The Montana mines "really are our crown jewels. Despite a tough period a year ago, we're continuing to invest in the Blitz project ramp up," Froneman said, adding the company is hesitant to further accelerate production because of environmental concerns.
If there's one challenge Froneman sees down the road, it's political movements against mining.
"I worry about the anti-mining sentiment. I think that if mining is done in the right way, and clearly in the past there are good examples of where it's been done the wrong way. I'm not advocating that, but the anti-mining lobby, I think is almost cutting off its nose to spite its face. That worries me a bit, I think there are good examples where our business can show how to do this responsibly," he said.
Sibanye Stillwater is a union shop, and Froneman said he's established a good relationship with the the largest union there, the United Steelworkers. The two sides have bargained and signed three contracts since the sale, and Froneman said he appreciates how the union operates.
"We find the unions mature, compared to the unions in South Africa. They're far more radical in South Africa," he said.