The Montana palladium mine owned by Sibanye Stillwater, a South African mining company, is expected to shut down. This decision is attributed to the continuous decline in palladium prices and a consequent drop in demand.
Neal Froneman, CEO of Sibanye Stillwater, announced at a London conference on June 25 that “If palladium prices do not recover, we will have to cease operations at the Montana palladium mine.”
In response to a question about the mine’s outlook, Froneman explained, “The future of Sibanye Stillwater is still balanced. If palladium prices do not adjust soon, we will need to go into maintenance and management on a strategic level.” Sibanye Stillwater reduced its investment in its less profitable U.S. mines by $2.1 billion earlier this year due to a sharp drop in palladium prices, rising operating costs, and constraints associated with expansion projects. Last year, they also cut some jobs to reduce operating expenses.
Froneman said in March, “The Montana palladium mine remains a strategic asset, and it is not the time to close it at this stage.” At that time, he said there was no way to make the mine profitable even if palladium prices fell.
Palladium is a silvery-white metal by-product of refining copper, nickel, and platinum. It is one of the most expensive rare precious metals, along with gold, silver, and platinum. It is mainly used as an essential raw material for catalysts that purify exhaust fumes from gasoline vehicles, accounting for more than 80% of total palladium demand. The demand for palladium, which soared with eco-friendly policies and exhaust gas regulations centered in Europe and China, recorded an all-time high in 2019 but has rapidly decreased since COVID-19. In March 2022, prices peaked due to the Russia-Ukraine war but have declined since then.
The decline in palladium prices is closely related to the global economic slowdown and changes in the global automotive market. The transition from internal combustion engines to electric vehicles and replacing palladium with platinum in gasoline vehicle catalysts have contributed to this trend.
The weak demand for palladium is expected to continue for the time being. In the long term, global car production, stricter emission standards, and technological developments will influence palladium demand.
Meanwhile, Sibanye Stillwater acquired Stillwater Mining for $2.2 billion in 2017, becoming the owner of the Montana palladium mine.
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