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Sibanye Stillwater Limited (SBSW)
Q2 2021 Earnings Call
Aug 26, 2021, 3:00 p.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Neal Froneman

To [Inaudible] for our international audiences, good morning and good afternoon. Welcome to our H1 2021 results presentation. And very importantly, to me, a group strategic update, which I believe you will enjoy and, in fact, hopefully find class leading I'll be assisted by Richard Stewart, our chief operating officer, who will provide operating results and update for the quarter and therefore, the first half of 2021. And then Charl Keyter, our CFO, will provide the financial results for the same period.

Post the presentation, there will be a Q&A session where you will have full access to the corporate executive. And for those of you who may be wondering, what is Jonny Five and obviously, those of you that have visited our operations in Montana will know that Johnny Five is a robotic arm and is part of our world-class recycling business which we will be talking more about later. So let me get on with the highlights of the presentation. But of course, our safe harbor statement, I'd ask you to take note of.

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Starting with people and people are clearly the most important asset in our business and the safe and health is -- the safety and health, I should say, of our people and workforce is absolutely the first priority. We did see a regression in safety, and Richard will talk you through that in more detail, but I'm very pleased to say that we've reenergized our safety strategies, implemented new strategies, and we've actually already seen a reversal in this regression. So I hope that continues. We've made very good progress with the COVID-19 vaccination rollout.

We've vaccinated more than 40,000 of our employees, and we look forward to extending that to a significant number more. And of course, in conjunction with the Department of Health rolling that out into our communities as well. Another highlight, and I will talk more about this in the strategic update, but we have now taken our ESG focus areas and develop them into a comprehensive sustainable strategy. And in fact, that sustainability strategy drives the entire corporation strategy, and you'll see that unfolding in the strategic update section.

At the last presentation, we did make a commitment to achieving net carbon zero by 2040 and internally by a significant amount earlier than that. I'm very pleased to say we've made good progress on that. Obviously, it's progress on strategy and planning. And it revolves mainly around renewable energy projects, and that is another area that I will focus on because that is critically important.

Operational excellence. You would have seen from the releases earlier today that we've delivered record financial results. That's off a solid operating base, especially within our South African PGM segment, which delivered exceptional results. And other than the safety stoppages, which hindered our delivery in the U.S.

and to some extent, in South African gold, they also delivered positive results. As I said, we delivered exceptional and actually record results from a financial point of view. Our adjusted EBITDA was 14.5 billion, or $2.8 billion, for the first half of the year. And we also generated a record adjusted free cash flow of ZAR17.3 billion and $1.19 billion.

Great results. Disciplined capital allocation. We shared with you some time back our capital allocation framework. I think you've seen significant commitment to that framework.

The key areas where we have adhered to that framework without any variation is we redeemed our 2020 two bonds that happened post us in August post the H1 cutoff date, but that was in August of 2021. We have declared an interim dividend of ZAR2.92 per share, or $77.21 resulting in the just under 10% dividend yield, and that was declared at 35% of our normalized earnings, which is at the top of our share dividend policy. We've implemented a 5% share buyback, of which we've bought back 1.92% or around ZAR3.4 billion worth of shares in share numbers, that's 56.6 million shares. And of course, Morgan Stanley is mandated to complete that process as announced.

We -- despite all these commitments and returns back to shareholders, we have a robust balance sheet position with a net cash position of ZAR10.2 billion or $702 million. In terms of the precious metals markets, we're not going to spend a lot of time on this today. We will spend more time on this on our -- at our Investor Day in September. But suffice to say, strong long-term PGM fundamentals remain.

There is some short-term volatility due to things like chip shortages and so on. In our view, the gold market is stable. Very importantly, again, there's been many requests for us to expand on our battery metal strategy, of course, within the limits of not releasing our competitive position. We will do that today.

But you have seen within this period, two steps in terms of the acquisition of the caliber lithium hydroxide project and the sandal nickel facility, which are strategic acquisitions in terms of positioning us in the European battery electric vehicle sector. We have also done more work on what we call our green metal strategy, and I will share more of that with you later on in patient, but that really is complementing the battery metal strategy. So let's just talk a little bit about the history, diversification and the growth that has underpinned our record earnings and cash flow. The the graph that you see up now has the history of how we've grown our PGM exposure both in South Africa and the U.S.

And as you can see from that, the very significant and material contribution made by the South African PGM sector, gold is reasonably stable, and the U.S. continues with its builder. You can also see from that how we deleveraging of the company has happened. And in fact, on a net cash to EBITDA metric, we've doubled that ratio from 0.06 last year to 0.14 this year.

So a very nice trajectory, and very pleasing to see the diversification strategy, creating such value. From a production percentage point of view, a couple of key points to note. This is -- the pie chart on the right is production in ounces, not in value. You can see the very significant number of ounces again under South African PGM sector.

Important to note on this graph and for the first time, we are segmenting the recycling business as a business unit, and I'll talk more about that a bit later on in the presentation. But we will be providing in future more data around the recycling business as we grow it. But you can see 17% of our ounces come out of recycling and very, very significant. So I do believe that our investment and moving from a single commodity to a multi-commodity business has been very, very successful and something we are very pleased with.

With that very brief introduction, I am now going to hand over to Richard to do the operational update and results. And post that, Richard will hand over to Charl to do the financial results. Thank you. Richard.

Richard Stewart -- Chief Operating Officer

Thank you very much, Neal. Good afternoon, ladies and gents and good morning to U.S. colleagues. I think it's a real pleasure to be able to present to you today an update of our operational performance for the first half of 2021.

As is customary at Sibanye Stillwater, we start all of our engagements with the safety moment. It is disappointing that during the first half of this year, we have seen a continued regression in our safety statistics. A trend that started after the COVID-lockdown impacts we experienced last year, and our deepest condolences go to the friends and families of eight of our colleagues who we have lost during 2021. We have a safety strategy that has proven its success in the past.

It is underpinned by a cultural transformation program, a program that drives the culture of values-based decision-making and is complemented by real risk reduction initiatives. Following the continued safety regression that we experienced into 2021, in June, we rolled out our rules of Life campaign. A campaign that targets addressing high-risk behaviors through a zero-tolerance approach. This initiative underpins our Zero Harm safety strategy, a strategy that includes the pillars of empowered people, an enabling environment and fit-for-purpose systems.

It is extremely pleasing that we've seen a significant improvement in all of our safety statistics across the board since we rolled out this initiative and during the third quarter to date. Our South African PGM operations have delivered a stellar performance over the last six months. Compared to the same period last year, we've seen a 42% increase in production at just under 900,000 ounces. Equally pleasing is that we managed our costs well and seen a 10% reduction year on year in our all-in sustaining cost, maintaining at below ZAR17,000 per four ounce.

This production delivery, combined with a 60% higher 4E PGM basket price led to ZAR14 billion worth of free cash flow generated from these operations during the first six months or equating to a 66% adjusted EBITDA margin. Equally pleasing is the successful integration of the Marikana operations, where we have managed to retain costs and reduce them in fact, by 13% over the last two years despite a reduction in volume output and despite two years' worth of inflation. We have now truly embedded the synergies that we realized through this transaction. We have also realized value from the spare capacity we had at our processing facilities.

And during the last six months, have processed and increased 35,000 ounces of third-party material through these facilities. Our Stillwater operations were on track to deliver a record six months performance. Unfortunately, however, due to a tragic safety incident at Stillwater West, that resulted in a 21-day safety shutdown, our output for the first half ended up being flat year on year. The ongoing effect of this unfortunate incident will continue to impact the Stillwater operations for the remainder of this year.

Pleasingly, however, the continued ramp-up of the Blitz project has exceeded planned for the year and will partially offset this temporary negative impact at Stillwater West. As a result, the reduced production -- as a result of the reduced production combined with a 24% increase in our 2E basket price, that impacts royalties and taxes payable, we have seen our all-in sustaining costs at this operation increased by 12% to $973 per ounce. Despite these operational disruptions, however, the underground operations still delivered an adjusted EBITDA of $437 million for the first six months of this year or the equivalent of a 65% EBITDA margin just on the underground operations. Stillwater also hosts the largest -- one of the largest recycling facilities globally.

And during the last six months, the output from this facility has delivered just over 400,000 ounces. That, in turn, has resulted in a $50 million adjusted EBITDA from our recycling operations, which when combined with a $12 million net interest income that was derived from short-term advances to our recycling customers, produces an EBITDA margin of 5%. Considering that our working capital has turned roughly four times a year or once a quarter, that 5% equates to a 20% return on that working capital investment. I dare say that this recycling business, besides for being just a low-risk business with very attractive returns, recycling is also an absolutely critical part of the demand and supply balance globally.

Our recycled ounces have a significantly lower emission and waste footprint. And therefore, this green fingerprint is highly complementary to our primary production base and forms a solid base for future growth in this area. Our South African gold operations delivered a steady and solid performance and compared to the same period last year that was disrupted by COVID. We saw a 29% higher production of just over 0.5 million ounces.

DRDGOLD delivered about 88,000 ounces of that, while the balance of just over 430,000 ounces came from Cliff, Beatrix, and refonting. As a group, our all-in sustaining cost was just below ZAR800,000 per kilogram and largely stable year on year. And despite a 3% lower average gold price, the increased production supported a 40% increase in EBITDA to just under ZAR2.5 billion. When we look at our forecast for the balance of the year, we are forecasting a slight downturn of about 40,000 ounces at our U.S.

PGM operations, or about 6% compared to previous guidance, as a result of the ongoing impact of the safety incident experienced at Stillwater West. This reduced production output also has resulted in an increase in all-in sustaining costs, combined with a forecast higher 2E basket price, which increased taxes and royalties means that we are now forecasting an all-in sustaining cost of between 910 and $940 per ounce or approximately 8% higher than previous guidance. There is a corresponding reduction in capital of also between 6 and 7%. Our U.S.

recycling business remains steady, forecasting approximately 800,000 ounces for the full year. There's no change to our guidance, our production or cost guidance at our South African PGM operations. Although we are forecasting a reduction of about ZAR350 million in capital, driven partially by real cost savings, as well as a delay to some of our project capital partially required due to permit requirements that were obtained later than expected. At our South African gold operations, our production remains flat, and we have not changed any guidance.

However, due to higher-than-expected inflationary costs, particularly associated with steel and associated products, as well as electricity increases well above inflation, we are forecasting a 5% increase in all-in sustaining costs to between 815 and ZAR840,000 per kilogram. We've increased our capital outlook at our gold operations by ZAR300 million to cater for the Burnstone project capital that was approved by our board toward the end of the first quarter. Thank you very much, and I will now hand over to Charl. Thank you.

Charl Keyter -- Chief Financial Officer

Thank you, Richard, and good afternoon, and good morning to all participants on this call. It again gives me great pleasure to share our financial results for half-one 2021 with you. If we start with revenue, revenue increased 63% to just under ZAR90 billion compared to the corresponding period in 2020. The improvement stems from very solid operational performance and strong commodity prices.

Costs increased by 28% and period on period, and this was mainly due to the normalization of the cost base following containment measures implemented during the hard lockdown period in 2020. We also saw an increase in recycling material treated, remembering that the cost of our recycling business are directly proportionate to changes in platinum, palladium, and rhodium prices. The basket price for our recycling business averaged $3,200 per 3E ounce for half-one 2021, compared with $2,200 per 3E ounce per half-one 2020. We reported record adjusted EBITDA of 40.5 billion compared to 16.5 billion in half-one 2020, which at the time was also a record.

The 40.5 billion represents a 45% margin. Moving on to finance expenses. Net finance expenses reduced from ZAR1.2 billion in half-one 2020 to 640 million in half-one 2021, and this was due to lower outstanding debt and higher cash balances. And following the early settlement of the 2022 bonds, we expect this number to decrease even further.

Share of results of equity accounted investees after tax increased from ZAR484 million to ZAR1.4 billion, and this was driven mainly by the performance of Mimosa following the strong commodity prices that we experienced during half-one 2021. Royalties was up fourfold to ZAR1.6 billion and mining and income tax up 4.5 times to ZAR9 billion. And this was driven largely by the increase in profitability for the business. Profit for the period was ZAR25.3 billion, up from ZAR9.7 billion in half-one 2020.

And this equates to an earnings per share of 8.43 per share. Moving on to the next slide. In line with our dividend policy, we declared an interim dividend of $2.92 per share or 35% of normalized earnings. Normalized earnings for the period was ZAR24.4 billion, and this resulted in an industry-leading dividend of about ZAR8.5 billion or a yield of 10%.

This slide also highlights the track record since the resumption of dividend payments in half-one 2020. Since half-one 2020, we have returned ZAR19.3 billion in dividends. Overlay on this, the approximately ZAR9.6 billion in share buybacks, this is a return of almost ZAR50 billion. Turning to cash generation.

The significant cash generation has continued into half-one 2020. Cash generated by the operations was ZAR59.7 billion. Working capital increased by ZAR4.5 billion mainly at our recycling business due to the increase in the 3E basket price, up from $2,200 per 3E ounce to $3,200 per 3E ounce. Capital expenditure was ZAR5.6 billion.

Royalties and taxes amounted to an eye-watering ZAR10.3 billion for the half year, and I'm sure the incoming minister of finance and the commissioner of revenue services welcomed his contribution to the fiscus. The dividend for 2020, as well as dividends due in terms of our employee ownership plans was paid during this reporting period and amounted to ZAR9.7 billion. The deferred payment of ZAR2.3 billion related to the deferred purchase consideration of the Rustenburg assets that we acquired from Anglo Platinum in 2016. During this period, we also repaid loans of ZAR750 million and the share buyback up to the end of June amounted to ZAR750 million.

The net result of this is that cash increased from ZAR20 billion to ZAR26 billion. In terms of our capital allocation framework, we continued with our strict and disciplined approach. Looking at project capital, the project setup and administration of the K4 project, Burnstone, and Klipfontein started during this period. An estimated expenditure for 2021 is approximately ZAR845 million.

Cash reserves for half-one 2021 was ZAR26 billion. which is well above our targeted level of ZAR20 billion. Just as a reminder, the ZAR20 billion consists of a debt buffer of ZAR15 billion and a cash liquidity buffer of ZAR5 billion. Returns to shareholders in the form of dividends for half one is ZAR8.5 billion, which is at the top end of our dividend policy.

And as highlighted earlier, dividends since the start of 2020 and amount to ZAR19.3 billion. We have further reduced our debt with approximately $350 million, post half-one 2021, through the early settlement of the 2022 bonds. And we are still on track to refinance the 2025 bonds with a $500 million issuance toward quarter four. And as highlighted, this is to ensure that we have access to the debt capital markets but also to take advantage of the low-interest rate scenario.

We committed when we have excess cash to consider share buybacks and the buyback of 5% of our issued share capital started in June. The estimated quantum of the buyback is ZAR9.6 billion. Lastly, and to wrap up, we will continue to allocate capital in a prudent and responsible manner to ensure value is created for all stakeholders and to ensure that the sustainability of our operations are preserved. I will now hand back to Neal, who will take us through the final part of the presentation.

Thank you, Neal.

Neal Froneman

Thank you, Richard and Charl. I will now proceed with the strategic update. I think as the slide headed our role in the greener future is on your screen, very important for us to acknowledge that, we take this role in a greener future very, very seriously. And I think you will see that from the next few slides.

As I mentioned in the highlights section, we have done a lot of work on our ESG focus areas. And that work has resulted in us developing a sustainability strategy. And in one mind, this is the higher level of ESG commitment. These are now the actual themes and plans that will underpin our commitment to environmental, social and governance.

And I'm not going to go through this slide in detail, except to say that if you look at it, there are four themes: firstly, developing a climate change resilient business, and you will see how that unfolds in the next few slides. And essentially, that's based on building a green metals business. We are not going to become involved in commodities and metals that are not environmentally friendly or produced in an environmentally friendly way. And as I also said in the highlights section, our operations need to be carbon neutral.

And we have a very granular plan now in terms of how we're going to get that. The second element, just to complete the themes is entrenching long-term economic stability in the areas in where we operate, and there are underlying plans highlighted by the book points in that area that have underpinned embedding human rights and ethics, absolutely critical in terms of sustainability. And you can see the focus areas there. And then, of course, you can only make proper decisions if you are data-driven.

And this data has to be granular and accurate and, of course, that underpins any good business. The key sustainability theme. And as I said, I'm really, in this next part of the presentation, going to focus on building a green metals business and on the road to carbon neutrality. So let's start with carbon neutrality.

I personally was very pleased, and I made it very public that the increase in generation licenses to 100 megawatts was a very important step in reforming the energy sector. I have, on various occasions, shared with our minister the risks associated with uncertain processes and uncertain time lines, which leads to discount factors being higher than they have to be. And I'm very pleased that these changes in licensing have reduced the time of these projects by something like three to six months. But probably, in my mind, more importantly, have reduced the risk of doing this work and therefore, we can end up with much better commercial outcomes.

So this was a key step in us being able to move forward. Now on the next slide, where we talk about progress on our path to carbon neutrality. You will notice, starting on the left-hand side, that renewable energy forms our strongest decarbonization levers, 88% of our greenhouse gas emissions stem from electricity. So we are fortunate that we really have one area we can focus on that can make such a big difference to our carbon footprint.

And that's exactly what we have done. So there are several renewable energy projects that are approved for execution within our South African operations, which contributed 97% of our scope two emissions. So of that 88%, we can address 97% of that 88%. We've always had the planning in place for a renewable energy project in our gold division.

As you know, we held back on that until we had the clarity that we now have. And so that site is secured and fully permitted and the last few processes for approval are now underway and we expect a commercial operational date late in 2023. We have also identified 250 megawatts of South African wind energy. We have put out requests for quotes, and we are targeting a commercial operation date late in 2024.

And then in our South African PGM sector, we are looking at 175 megawatts of solar energy projects. And the South permitting is now underway, and we are targeting a commercial operation date as early as 2025. Now these projects in their own rights are important in terms of reducing our carbon footprint. But as you will see, there will also be done in a way where our infrastructure for impact program will seek to maximize broad-based economic empowerment utilize local skills and develop them and make a positive social and economic impact in these areas.

So that is a very significant step forward and should provide investors and stakeholders with some clarity around our reduction our process to get to carbon neutral as we've promised. Let's move on now to building a green metals business. And the green metals business is essentially underpinned by our current exposure to PGMs. And currently, we all know that they removed noxious gases from the air.

But in the future, we'll certainly form an instrumental role in the hydrogen economy and hence, in a much greener future and that will be through -- predominantly through fuel cells. Recycling, I will again highlight some information that shows the importance of recycling and the circular economy. But we do intend to leverage our existing business by growing it looking at inventory management and unlocking logistical challenges. Tailings retreatment, our exposure to that part of the business produces the greenest metals.

And in this case, it's gold at the moment, but there's no reason why some of the greenest copper, PGMs, etc., can also be produced through tail injury treatment. Importantly, it cleans up the environment at the same time. So a great business to have exposure to and complements our green metals strategy. Battery metals.

As you know, it's been something we've been working on for at least the last two years. And Kalimantan make the first few steps into the space. And more specifically, you can see that we are targeting the European market from a battery electric point of view. And you can expect more in that area, and I'll discuss it in a bit more detail in the next few slides.

Many analysts have noticed the rising importance of uranium, and we will look forward to creating value out of our existing assets. Nuclear energy is clearly going to play a part in the future energy mix because of its carbon friendliness. And you would remember that the acquisition of cook was predominantly based on the uranium exposure many years ago, which we have returned, and I will discuss that in more detail as well going forward. So those are the -- essentially the building blocks that I'm now going to expand on.

I don't think there's a need to talk too much about PGMs. I think over the last few years, there's been a lot of focus on PGMs what they do, the fact they are considered green metals that are important for the environment. In terms of current uses, removing noxious gases from internal combustion engines, environmental legislation is stringent and increasing, driving higher PGM loadings, which are then the current use. And of course, there's ongoing industrial and jewelry demand, which complements that.

I think in terms of looking forward and the sustainability in terms of the use of these metals, the hydrogen economy will certainly, as I've said earlier on, underpin future demand. Platinum is clearly an effective catalyst in PMA electrolyzers, and fuel cells Iridium is the same in terms of electrolyzes. And of course, Retenium is utilized in this area as well. So I certainly have little concern around the PGMs, the one that is probably at the highest risk is palladium and hence, why we have also been driving substitution research in terms of using palladium to substitute rhodium.

So the PGM fundamentals are well understood, and I really don't think I can add much to that at this stage. Just in terms of the PGM market, I think it's appropriate just to provide a very brief update. I think the market is currently quite volatile, but in terms of the medium and long term, I think the demand fundamentals on -- the demand and supply fundamentals are good. The supply disruptions from the first quarter of this year eased in the second quarter, recycling because of the elevated prices.

It is, in our view, going to increase by approximately 15% year on year. The mine recovery is certainly impacted by the delta variant and, of course, chip shortages. But I think we will see a move to normality in 2022, and certainly, automotive manufacturing or rebound we believe, in 2022. Despite all of the above, the overall 3E PGM market remains in deficit in 2021, and that's really the key with key message.

There's a lot more granular detail that again will be presented at our Investor Day in September. But for the purposes of this presentation, I think the fundamentals in the longer term are robust. Just moving on to the next slide slide regarding recycling of PGMs. And clearly, recycling is part of the circular economy enabling multiple utilization of these very unique elements.

Important to note that our U.S. recycling business is one of the largest recyclers of PGMs from spent auto cats. This is the most environmentally friendly way of producing PGMs. they -- through this process, we emit six times less tons of CO2 then from an underground operation.

63 times less water is consumed in recycling compared to underground. 90 times less waste is produced from recycling than occurs in underground mining. As such, we have decided to create a dedicated business unit. And as I said earlier on, that's reflected in the fact that we are now segmenting the recycling business accounts.

The recycling business unit will be led by Justin Froneman out of the U.S. and the existing store recycling team, which he is part of and it will be complemented with technical capacity from South Africa. The growth strategy that we have developed for this business will be implemented and you will our hope progress even within the next six months. We will use our acumen and technical capacity for process enhancements and margin accretion of key focus areas in this business.

As you can see from the diagram on the left, we understand this business well. We know where the margins are made. And certainly, we look forward to building up a very substantially and larger PGM recycling business. The acquisition of standable in our mind is also key for our entry into the European space.

Just talking about tailings retreatment and DRDGOLD is an investment we made fully acknowledging the importance of this type of production of gold. And as you can see from this slide, we believe it produces the greenest gold in the industry and -- but also serves in terms of removing environmental legacy specifically in the South African gold mining space with hundreds of hectares have been cleared for social and industrial development. Those tailings dams that remain have been vegetated reducing that and improving the environment. Profits from this business have been plowed into social investment in use education and urban farm.

It's a business we really like. As we have said publicly before, we would certainly want to see it being built into other commodities, which will result in them also being green commodities produced from tailings retreatment. And we certainly back DRD to do that. Right.

Moving on to battery metals. And as I said in the beginning, we can't lay out our exact strategy to the market because it will reduce our competitive edge. But what we can do is as it evolves we can share with you our thinking, which I think you will find class leading. So building on what we've said before.

And remember, we've been working on this for more than two years post the acquisition of SFA Oxford. The penetration of battery electric vehicles has accelerated. And the graph on the right-hand side shows you how projections are changing. And again, I want to highlight, we don't see this as a threat to PGM.

We see this as complementary to PGMs. And you will see that as we built the building blocks on our green energy and metal strategy. The Chinese and the European markets are at the forefront, but in the not-too-distant future, especially with President Biden's initiatives that you will follow -- you will see North America following suit. And what we are noting is increasing regionalization of battery metal supply chains.

And hence, our need to make sure we are well positioned in Europe, and we're going to be well positioned in North America to complement those supply chains. Lithium is the key metal. We have raised that before. And I think to us, it's clear that demand is banter current production volumes.

So we look forward to building our lithium exposure in the sector. And that's because deficits will do in the not too distant future without substantial supply initiatives. The cathode chemistry is moving to high nickel compositions. And hence, our interest in nickel and nickel processing, we believe that's going to be instrumental and hence, the acquisition of sendable refining nickel refining facility in France.

Security of responsible supply is an increasing focus area, which is a problem for cobalt. And of course, the recycling business unit we've just announced and described, it will be their job to move into battery metal recycling as well, once they've grown the PGM side of that business. And we see that being material from 2025, and most analysts will probably say, but you're not going to have batteries ready for supply. There are many batteries that do not make it into production because they are faulty or suboptimal that need to be recycled.

So we see sufficient supply in the not-too-distant future from a recycling point of view. Our initial battery metal steps I've described a few times now, and I'm not going to go through the reasons for caliber. It's well -- it's being well explained, and that's listed again on this slide. But I do want to talk a little bit about sendable.

And of course, we have many times said what we are not going to become is a contract miner for any particular party. We do intend to be involved in supply chains and build on our existing relationships with the OEMs, which are the same OEMs in the PGM space. We have announced a strategic partnership with Johnson Matthey. And that partnership is to drive more efficient use of PGMs and metals used in battery technologies -- technology.

So we're well placed in that area. Just a little bit on standable. It's a nickel processing facility in France. The structure of the transaction may look a little bit strange, but we have a put option to acquire 100% from Eramet.

And you can't conclude a transaction like this in France until the Works Council consultation process is complete, and that will be certainly around the end of 2021 when we will be able to exercise to put. So this is not a put option in the normal sense of the word where you keep your options open. We have bought this facility and we are intent on closing the transaction. It's in an absolutely prime location in the industrial heart of Europe at the half at France's second-largest industrial port with significant logistical infrastructure.

It's a polyvalent facility, which is already zoned for heavy industrial purposes. We have a scalable plan for nickel cobalt and the team battery-grade products. And you can see the capacities that are produced, I'm not going to go through that in detail, but it also is a footprint where we can start our European recycling business. So a great acquisition, which complements Keliber and certainly complements our strategic focus on Europe.

So let's put the puzzle pieces together, and you can see the puzzle being built. It's a combination of the base of palladium, platinum, rhodium, Iridium, and rethenium, complemented by recycling, which predominantly now is in PGMs, but will expand into other metals. Uranium is an important building block and I'm going to talk about uranium shortly. Tailings retreatment is conducted in the right way, also produces green metals.

And then, of course, the battery metals or the green energy metals are listed at the top of the puzzle. And I know that Gravitas not a metal, but it's part of those suites of elements that are necessary for battery. So that is the green metals strategy and you can see how it's all coming together. So moving on to uranium.

As I've said, we see new horizons for uranium, and it is going to be a significant element in our green metals portfolio. Nuclear is emerged as a zero carbon baseload generation option, essential for global decarbonization. I've always been a big proponent of nuclear energy. You're going to see growth especially in the Asia Pacific region.

And there's 125 gigawatts of new nuclear capacity being planned. We see the uranium market moving into deficit over five to 10 years. And we see long-term price forecasts exceeding $60 per pound. In terms of our own portfolio of uranium assets, we have 100 million pounds essentially of shallow and Circus uranium resources at Beatrix West and Cooke.

Those of you who know the South African mining landscape, Beatrix West, was originally trips four shaft, which was originally the uranium mine. And not a lot of uranium mining was done so there's still substantial reserves that will be mined and we will be looking to doing that. And if you complement that with Cooke, which as I I said earlier, we purchased predominantly for its uranium potential. And its uranium processing infrastructure puts us in a very good place to kick start our uranium business.

And from a value perspective, we get zero value for these assets in any type of valuation. I'm very pleased to say that a long time associates and an advisor to will be leading this initiative. And just in general, a comment, if you want to move an initiate to forward, you have to do two things. You have to develop a strategy and you have to put people in place to make it happen.

And that's exactly what we've done with recycling and with this initiative. I want to make one last comment on Beatrix. As we know, Beatrix only has about five years of life as a gold production area. Moving into uranium is going to create further sustainability, which is important from a sustainability point of view as we move into uranium mining.

And so many benefits from this initiative. And again, you will see it evolve over the next few months. So if we talk about ongoing strategic value creation, I think you can see the strategy of pivoting into green metals through the combination of PGMs, restarting tailings retreatment, battery metals, and uranium. We have, we believe, first move advantage in terms of the entire package of assets.

You have focused lithium producers, you have focused nickel producers, but you really have very few metals producers that have the combination of these metals in their business. And again, I want to say that this was not just because it's become popular. We started this process some two years back through the acquisition of SFA Oxford, and you can now see it evolving, and I think you will see it moving at an accelerated pace. Keliber and Sandouville are our first entries.

And if you see the evolvement of the sigmoid curve, you can see the green energy metals strategy unfolding in the fourth segment curve. And just to confirm, the strategic focus areas of our business remain the same and the strategy of green energy metals has been encapsulated in the segment, the orange segment of our strategic focus area of pie chart, and that's fully an operating portfolio of green metals and elated technology. So that complements the existing strategy. Let me briefly conclude, and I would be amiss not to express my disappointment with valuations that we receive in the mark ups.

And again, I think this is just one aspect. I note many analysts have us at about one times NAV, that does not concur with our NAV assessments. And of course, our point four fingers back at our company for perhaps with assisting in the understanding of the waterfall graph here in terms of the segmental net asset value. Now clearly, that's a process of making sure there's a good understanding of each one of these business areas and the value they contribute.

And that will be presented in the sort of detail that will assist and I hope result in analysts looking at their valuations. You can see our 2021 Investor Day on the 9th of September and 22nd of September. On the 9th of September, we will go into more detail on embedding ESG and the way we do business, that's the core strategic focus area. On the same day, we will do the South African gold operations.

On the 22nd of September, we will focus in on the solid fundamentals of the PGM market. On the same day, we will cover the PGM operations, both in South Africa and the U.S. So I really hope you will take the time and the opportunity to understand our company better and afford us a better rating. Just in terms of superior value creation current and for the future.

Important to always look where you've come from. If you talk about improved profitability, I think we can give this a tick our 2013 to 2019 cumulative normalized earnings were ZAR9.9 billion or $806 million. In H1 2021, we generated 24.4 billion or $1.68 billion of earnings. That's 85% of the 2020 full-year earnings and multiples more than the preceding year.

So -- no question about improved profitability. In terms of dividend, we can paint a very similar picture in 2013 to 2017. Cumulative dividends of ZAR4.1 billion or $327 million from our South African gold business. In H1 2021, we have declared a dividend of 8.5 billion or $565 million, at an implied 9.7% annualized dividend yield.

So very significant growth in dividends. When we listed Sibanye, we had 13.5 million ounces of gold reserves in South Africa with a limited life and questionable sustainability. We've transformed this company into a substantial diversified mining and processing company with long-life assets. We still have more than 10 years of life in some of our gold division.

We have 30 years plus of life in our South African PGM business, and we have more than 35 years of life in our U.S. PGM business. A huge difference in sustainability compared to when we started. I would be amiss not to note the 5% buyback of shares.

And as we've always said, we will be opportunistic in terms of share buybacks, and we certainly do that because some of our shareholders believe it's important as well. Our market cap appreciation since 2013, a very significant increasing market capitalization in eight years of ZAR163 million or $10.8 billion, very, very significant. And the last point on this slide is we believe we will do more of the same through advancing the complementary green metals to our current PGM portfolio. Last slide is also about making real changes to transform and create value for stakeholders.

And they just work through this. We have restructured the Marikana Empowerment structure. The previous structure was badly broken. It was long beneficial, had a substantial debt burden.

The new sustainable financing structure was a win-win from both sides, providing immediate access to distributable cash flow, an ongoing transfer of real tangible value. And of course, by doing that, we secure our license to operate for these operations. And what do we mean by that? Let's move to the block on the right-hand side at the top. Just have a look at the social relief that we have provided through our BEE structures and employee profit share schemes.

ZAR145 million was paid to the Rustenburg BEE structures and ZAR64 million to employees by a profit share scheme since the acquisition of those assets 91 million was paid to the Marikana empowerment structures and 521 million was paid to the Marikana employees trust for the 2020 year this year, it should be even greater. ZAR294 million has been paid to the South African gold employees via the Sino Trust since 2013. And then, of course, we've been able to invest in ongoing projects, K4, Klipfontein, and Burnstone, which are also going to create 7,000 jobs. Let me move on to the lot below that, contributing to the fiscus and social imperative, which is critical not just in South Africa, but in the rest of the world as well.

We paid royalties and taxes in this half of 2021 alone of ZAR10.3 billion. We are delivering on our social labor plans, were each one of our mining licenses. We have instituted an employee voluntary contribution scheme where an employee can make a contribution and the company will back as well. So it doubles the value of that contribution, and we look forward to growing that and put plowing that back into the communities in which we operate.

And then we've made very substantial sponsorships and contributions to universities, groceries, and learnership programs. And one was announced recently in the last week or so was at ZAR52 million contribution to Wits University. In terms and last but definitely not least, is our progress on women in mining. And we have made a commitment to ensure that we have 30% of females in the workforce by 2025.

And of course, the -- that will not happen unless you see that type of ratio being implemented in terms of groceries in terms of promotions, and you can see both of those 30% contribution, 31% of new recruits in 2020 in South Africa were female and very pleased to say that 31% of directors are currently female. So a very serious and sincere attempts to improve the participation of women in our business. So with that, I'd like to say thank you for your time. I hope you found that interesting.

And at this stage, I will hand over to James to facilitate the Q&A. Thank you very much.

James Wellsted -- Senior Vice President, Investor Relations

Thank you, Neal, and welcome, everybody. I'm just going to ask a few questions from the webcast first. The first one being from Warren Riley at Bateleur Capital. How -- sorry, let me just take this off for this section, please? Have auto manufacturers continue to buy PGMs despite the semiconductor shortages, eg, i.e., have they been stockpiling soon?

Neal Froneman

I have continued to buy. But I would say that there's been a reduction in purchases, so I don't see it as a stockpiling event. And again, despite the chip shortages, the differences in vehicles that are being manufactured is really a few percentage points. So no, I don't -- I wouldn't suggest that you're going to see ongoing demand disruption due to this.

Certainly, the chip shortages will go on into next year, but I don't see it as a stockpiling thanks, James.

James Wellsted -- Senior Vice President, Investor Relations

Thanks, Neal. The next one is from Catherine Cunningham at J.P. Morgan. Thanks for the presentation.

First question, on the SA gold cost provisions. How much of this is electricity driven? And how much is the other costs? And then secondly, what other costs are seeing above inflationary increases?

Neal Froneman

OK. Thanks, James. Richard, why don't you fill that question?

Richard Stewart -- Chief Operating Officer

Sure. Thank you very much, Neal, and good afternoon and good morning, everybody. In terms of that question, probably about 25% of the increase that we have changed our guidance by or forecast increase is due to electricity, and then the balance really due to other inflation factors. The key other inflation or above inflation increases we've been seeing commodities driven.

So anything that relates to steel support structures, draw rods, etc., that's definitely gone up quite significantly. And then other industrial chemicals, etc., that we're using in our plants. Those would be the three big drivers. Thank you.

James Wellsted -- Senior Vice President, Investor Relations

Thanks, Richard. The third question is from Arnold Van Graan at Nedbank. How long would it take to get full flexibility back at Stillwater? And could the issues there continue to impact 2022 production levels?

Neal Froneman

Thanks, James. And again, I think that's best answered by the chief operating officer. So go ahead, Richard.

Richard Stewart -- Chief Operating Officer

Thank you, Neal. Yes. So Arnold, essentially, what has happened at Stillwater is we have a series of stopes that will be operating at less than normal capacity for a period of time, that will continue for this year. We can catch that up.

And at the moment, the forecast we're looking at to get back to a normal level of faces is about 18 months -- 18 to 24 months. So for a period of time, we'll be operating at slightly less flexibility than what we would ideally be operating at.

James Wellsted -- Senior Vice President, Investor Relations

Thanks, Richard. The next question is from Steve Sheppard, shareholder. Well done for the excellent results and the substantial returns to shareholders. Thank you, Steve.

Looking at the valuation of the shares, which remain strangely inexpensive in my view, do you think it may make sense to back the gold operations into DRD for new DRD shares and then bundle these shares and ADRs to current shareholders? The name Sibanye Future Metals has a nice ring to it.

Neal Froneman

I would suggest though that we would probably want to keep DRD, let's say, clean as far as the tail injury treatment business. So I think it may make it may compromise that strategy were we to reverse underground assets into it. And we have certainly said to DRD. We do not want them to grow the underground portfolio at all.

It's really about growing their tail entry treatment portfolio based on exactly what I presented in the green metals strategy. But we will give you your suggestion, some consideration I like the ring of Sibanye Future Metals. We'll also give that some consideration. Thanks, Steve.

James Wellsted -- Senior Vice President, Investor Relations

Thanks, Neal. The next one is from Campbell Parry at Investec Wealth & Investment. Very concerned about the fatalities we've experienced at Sibanye since 2016. What real changes are you making to alter this unfortunate record? And to what extent are the improvements baked into compensation?

Neal Froneman

Yes. Perry, thanks and a very appropriate and good question. I can assure you that safety and health and specifically safe production is our first, second, and third priority. So it features before anything else in our discussions, in our business, in our considerations.

I think it's important to note a few things, and it's very important to me not to make safety statistic. But our safety strategy that we introduced more recently has been very successful. As you know, we built up a record number of fatality-free shifts in our ultra deep-level gold mining environment, which is our highest risk environment. So our strategy does work.

I think we have noticed and I'll try and draw the link. We have noticed that COVID-19 and the return to work has created a major disruption with respect to safety performance. And the link is really that a lot of our initiatives to achieve those record fatality-free shifts were based on getting teams to work together, getting teams to -- members of teams to associate with their team members and look after their team members, including themselves. Unfortunately, in bringing people back to work post cohort, we had to bring people back to work based on where they lived, not based on the original team.

So we've had to rebuild those team dynamics, and we don't do that overnight. So that's been the primary driver. I also need to point out that if you look at absolute numbers, you're probably in a way, treating us very harshly, although you have to look at absolute debts and fatalities, but we do improve 85,000 people. And when we look at rates, we are certainly performing better than most of our peers.

However, we've still got a long way to go. We have made commitments to get down to industry levels related to the ICM group, which really includes a lot of open-pit mining operations in jurisdictions that are a lot less risky. So we've taken on that at and we are working toward that, and we have a strategy that takes us there. It is incorporated into our remuneration, both short-term and long-term remuneration is impacted by these very unfortunate events.

Again, just to summarize, it's our key focus, and it's our most important priority. Thank you.

James Wellsted -- Senior Vice President, Investor Relations

Thanks, Neal. The next question from Shepard Moana asks good day. Thanks a lot for a great initiative on renewable energy. Any plans to share the energy with the public if the capacity allows or if it's all focused on the business?

Neal Froneman

Absolutely. I think the way it's been designed out, it could certainly be mostly focused on the business. And -- but certainly, if there was spare capacity and our plans could include doing more on the renewable energy side with a view to supplying the public because that could go away some way to assisting us in getting to carbon neutrality as well. So if there is spare capacity and we do amend our strategy, certainly, we would look to do that.


James Wellsted -- Senior Vice President, Investor Relations

Thanks, Neal. Next one, again from Steve Shepard. On PGM markets, do you see increasingly rampant auto catalyst theft impacting supply from this recycling source given the recyclers ESG imperatives, In brackets, can they risk buying stolen PGMs?

Neal Froneman

Steve, it's a major concern of ours. And we have commitments, and we are bound by assurances we give to various regulatory bodies in this regard. And I'm going to ask Justin to comment in more detail. But I specifically undertook a visit to a number of recyclers in the U.S.

And each question -- well, at each visit, I asked exactly this question. And I was comfortable with the amount of effort that goes into the regulatory controls that are in place and the absolute, let's say, sincerity with which these collectors and other recyclers look at catalyst. Justin, do you want to add to that?

Justin Froneman -- Regional Chief Financial Officer

Thank you very much. And, Steve, good question. I think as Neal has mentioned, this is a critical focus area for us. We we are subject to, obviously, good delivery requirements by Johnson Matthey and the LBMA and LPPM, which obviously requires us to source catalysts responsibly.

And we have various subcommittees internally that obviously monitor this. We also are part of the IPMA, with regards to their initiatives on catalysts and catalyst theft, and avoiding obviously those being processed. As part of our KYC process, we only deal with sizable, obviously, collectors. As Neal's mentioned, we do undertake regular site visits to understand their processes.

And we do push down those responsible sourcing requirements to our collectors. And that is part of our contractual agreements, as well as part of our KYC process. And then finally, we also undertake a variety of -- we are looking at technology really around the blockchain area to trace and track catalysts. It's in its infancy, but it's certainly an area that we keep a lot of attention on.

And the entire industry is in fact, focused on this. As Neal mentioned, it is a critical area for us to manage and mitigate. So hopefully, that's enough.

James Wellsted -- Senior Vice President, Investor Relations

Yes. Thanks, Justin. Next question from [Inaudible] from Excelsior. Well done on a great set of results.

You mentioned that automotive manufacturing rebound is expected to satisfy pent-up demand during 2022. Are you seeing this currently from OEMs? Which metals are OEMs worried about in terms of demand? What would signal to you that we are on top of the cycle? And then when will you consider increasing the dividend payout ratio. So there's a few questions there. So maybe let's just start with the pent-up demand and what we're currently seeing from OEMs and what metals they're concerned about.

Neal Froneman

Yes. Thanks, James. And essentially, I do believe we will get back to normality in 2022. This -- the chip shortages are being addressed in various ways, manufacturers are moving to get vehicles out with the highest profitability.

So they continue to deliver. They're also delivering vehicles with our chips to be retrofitted. So although it's a bit of a crisis. It will resolve itself as the COVID disruptions become something of the past.

And of course, that becomes some many of the parts mainly due to vaccinations. But it also becomes something in the past due to additional chip supply coming onstream. So we do see things normalizing somewhere in 2022. In terms of the metals that remain critical, and again, we'll give you more detail on this at our Investor Day, but it's the same metals that are in deficit rhodium and this is with respect to auto cat at rhodium and palladium.

I think suffice to say that even under these conditions, we see the 3E basket being deficit even in this period. Thanks, James. The second part to that question, just to repeat it again.

James Wellsted -- Senior Vice President, Investor Relations

Yes. What would signal to you that we are at the top of the cycle? And then the next question was, will you consider increasing the dividend payout ratio?

Neal Froneman

OK. Yes, let me get to the dividend payout ratio. I think we worked hard today to put to you and the investors that we believe. And based on our track record that we can certainly create value through cash that is not earmarked for returns back to shareholders.

And we've laid that out in a way that shows how we can create superior value. If we are unable to deliver on that strategy, we will certainly increase our dividend payout ratio. But I think we've demonstrated and very much in line with our capital allocation framework that we've put money aside to deal with volatility around debt and create a bit of flexibility there. We've paid a dividend at the top end of our payout ratio, and we've implemented a share buyback.

Yes, we do have some excess cash, but I also think that shareholders will back us to continue creating value and sustainability. In terms of the talk of the market question in my mind, I don't see a top of the market. I see a transition from good current fundamentals and a transition as the PGM usage move from predominantly order cuts into the high-region economy. The only metal that I see at some risk in that process, and it will be dependent on developing other uses is playing.

And that's not a new view. That's a view we've held for some time. But certainly post 2025 with additional supply and the transition we're talking about, from a mobility point of view, palladium could well come under pressure. And essentially, what I'm saying is projects, palladium-rich projects that come into production around are probably high-risk projects.

Thank you.

James Wellsted -- Senior Vice President, Investor Relations

Thanks. Neal, I think for -- there are a couple of questions that have come in recently on the web. But let's just go to the phone lines and pick up some questions people holding there.

Questions & Answers:


Thank you. [Operator instructions]. We have a question from Patrick Mann of Bank of America.

Patrick Mann -- Bank of America Merrill Lynch -- Analyst

Good day. Thanks very much for the update and the presentation. I just wanted to ask you, on the green middle strategy. So we understand that you've started this a while ago and you incorporated SFA Oxford and you kind of have done your homework.

But at the same time, there has been a kind of -- it's a bit of a feeding frenzy at the moment with everybody trying to pivot toward these green metals. How do you think about the kind of risk of overpaying or maybe a kind of winners curse, where if you win an auction or you win a bid for an asset that given how desirable they are at this point, there's a risk of really overpaying to get your hands on it. Again, I understand you've done all the homework and that, but everybody seems to be fishing in the same pool, right? Thanks.

Neal Froneman

Yes. Patrick, great question. And I'm going to ask Laurent to comment briefly as well. But certainly, I think it's that two years of work that puts us in a very good position to know what the future markets look like.

We generally do not participate in competitive processes. And we have a very good idea of what value is based on our view of the markets, the fundamental underpins in a resource and cash flow models. Laurent, who heads up our business development will tell you as tools. So one is the first one, most important one, is do not use money.

And the second one is to make money. The fact that we've got a strategy doesn't mean we're just going to buy assets in this feeding frenzy. We will be very disciplined. And I'd rather come back to shareholders and say we couldn't implement the strategy, but watch there's going to be a lot of mistakes made.

And we will, in the meantime, return cash back to you because we couldn't do what we wanted to do and we will buy assets in the future and probably even better numbers because a lot of mistakes are going to be made. So that's a discipline. And unfortunately, we can't tell you how many we turned down either. But I can assure you, we turn down more than what we buy a lot more.

Laurent, do you -- would you like to add to that?

Laurent Charbonnier -- Chief Commercial and Development Officer

Thanks, Neal. And I will be brief on the two rules just for everybody's understanding. The first one, don't lose money, is about are we the right owners for our business. Like how do we de-risk the integrations? What is the SG footprint.

It's about being very, very disciplined with all the due diligence work and whether -- and beyond just looking at assets, it's about making sure that we are going to be able to retain the very good people who are coming alongside with these assets. So that's one. And when you're looking at some of these potential investments that we're considering, it can be acquisitions or it can also be under the form of smart partnership to make sure that we de-risk as much as we can the deployment of capital, investing not only in assets but also in people. And there is very strict financial discipline that we're also applying because it's important to be able to work toward having an investment-grade balance sheet.

The second rule once you want to be the owner of a particular asset or to invest in a partnership with a company is about attracting the right returns because we are very financially disciplined, and we actually want to rerate the company as opposed to getting into some difficulties with the market for making the wrong types of investments. So as Neil said accordingly, although I have joined the group toward the end of last year, it is true that we have looked at a few things, which we've decided to pass on even because they were not the right assets or because we have the right assets but would have demanded too higher price where we could not have achieved the right returns. So we are still working very hard. There are a few opportunities available in the space of battery materials, and we hope that we are going to be successful over the coming months to build a great battery material strategy.

But I think that if you look at who we are and how we want to internationalize our group, it's really important to be able not only to look at good assets, but to be able also to attract great people. And that's true for the first small, but important acquisition of our potential acquisition because it's not closed yet of [Inaudible].

Patrick Mann -- Bank of America Merrill Lynch -- Analyst

Thanks. Thank you very much.


Our next question is from Adrian Hammond of SBG Securities.

Adrian Hammond -- Standard Bank Group Securities -- Analyst

Hi. Good day. Thank for the opportunity and thanks for comprehensive presentation. I have a couple of questions for you and your team.

Just curious to understand a bit more about how the European governments and OEMs that will be certainly the government the attitudes have changed toward batch manufacturing given the lead China has and does this offer you support in terms of funding and partnerships? And while we're on that strategy around battery metals, would you consider partnering with an OEM as part of your strategy? Second question, it's really for you, Neal. I mean I'm interested to hearing your comments around your view on the valuation. It's certainly not sell-side contrary to your comments, given the consensus target price of ZAR92 a share. But you -- you've done all the right things, given improved earnings, dividends, share buybacks, debt reduction, strong ESG focus, etc., etc.

So I guess the question still remains, why do you think your stock is trading at the discount versus peers? And the third question is for Richard around Stillwater. This mine has been experiencing some annual cost inflation of 9% in dollar per ton terms and curious to ask around the outlook for Stillwater, whether it be guidance. If you can remind us what the guidance is and whether that's still intact and whether these issues here as consequences. Thanks.

Neal Froneman

All right. Thanks, Adrian. And again, good questions. Richard, I'll do the first two, and if you would then pick up on Stillwater specifically.

So what we have noticed strategically, and I'm sure most of you have seen this is that COVID and the lockdowns -- and because they didn't all happen at once they were almost sequential put OEMs in very difficult positions in that part of their supply chain, which came out of China or Korea got severely disrupted before they even went into lockdown in the U.S. So right from the beginning of COVID-19, there was a move or a consideration by OEM to regionalize their supply chains into the regions that they trust and can manage. And we saw that and got that feedback and it was actually quite visible just through reading. I think the other thing that has happened is that there's been a significant move around nationalism and the threat posed by the focusing on resources or production in one area of the world has put other areas of the world at risk and China and America is a good example.

So this regionalization of supply has actually resulted very fortuitously for us, being able to market, let's say, North American Palladium for North America. And that resonates with the OEM, that resonates with government. And of course, governments have stepped up to the plate and are providing incentives are engaging with mining companies will certainly ourselves as to how we can assist in the national interest all over the world. Our entry into Finland was essentially with the Finnish Mining Group, which is state-owned our entry into France had a component of the French government who's a shareholder in [Inaudible].

And of course, these all had approvals at very high levels, but it also has us as a company committing to actually being focused and part of the solution in this case in Europe. And I'll daresay we will do the same thing in North America and in any other part of the world we step into. There are subsidiaries, there are backings that can be achieved from governments in the battery metal space because they are driving it based on their belief that it's environmentally responsible. I think there's still going to be a much slower uptake by the way, because of infrastructure, a shortage of metals.

And that's one thing I want to say, in general, is that existing technology will survive and prosper much longer than what people think because it will get better and there are hurdles to some of the rates of ramp-up in some of these new technologies. Would we consider partnering with an OEM? Absolutely. One of the benefits, and let me say, again, we've actually engaged, I won't mention that on with OEMs on buying stakes in projects. So it does happen.

It does get considered. The problem is with an OEM. They have a very low level of understanding of mining and the resource and the financial models that underpin it. So it's not -- they're not easy processes.

And -- there have been some real knee-jerk reactions by OEMs. And I'm confident to say they will make some big mistakes because some of them are going to make moves in knee-jerk reactions. And you've already seen some of those have resulted in stillborn projects and wasted money. But we believe it's important to partner with OEMs.

We did it with substitution. It helps get an understanding of the way we mine baskets sustainability and so on. So yes, OEMs should be good partners, and we do talk to them. On value, I think it's a number of issues.

I've always said that it's going to take some time after having come out of a very highly leverage period that the market is going to want to see three or four or maybe even five or six quarters of consistent delivery. They're going to want to see a track record of dividends. And of course, we're entrepreneurial and this creates an overhang. But we're not going to hide away behind that.

I think we will demonstrate industry-leading dividends and share buybacks. We will make smart acquisitions. We are entrepreneurial. It's one of the areas we can add value.

And unfortunately, that does create a bit of an overhead but that doesn't mean we're going to hide away from that. I do think and why I spoke about net asset value. And I take your point that there are much higher valuations coming out from analysts, even at the levels we're trading at. But I personally believe that our net asset value or price to NAV is probably around 0.5, 0.6.

And I think that we are hitting a lid on a NAV because there's this perception we had 0.91. And again, I'm not blaming the analysts, we have more work to do. As I said, there's four fingers pointing back at us. We -- there was a lot of acquisition activity.

We haven't had an Investor Day where we can lay out plans, we can address concerns perhaps even misconceptions. Our gold business, our ultra-deep level gold mining business is definitely a drag, but we employ 30,000 people. We can't signal that responsibility either. So I think those are all things that impact value, but I also believe if we just keep on doing the right things, which we are doing, the value issue will -- the discount will certainly change.

And I suppose one other aspect is, of course, the South African related risks, but our bigger problem is not the South African related risks, it's the issues that I've mentioned. So with that, let me hand over to Rich, if you wouldn't mind addressing Adrian's question on Stillwater. Rich.

Richard Stewart -- Chief Operating Officer

Yes. Adrian, thanks very much, man. I suppose to address your inflation question of worth just stepping back for a second. At Stillwater, over the last couple of years, we fundamentally had two objectives.

The first one has been about increasing flexibility at Stillwater West. So that's more development. And the second one has been about ramping up the Blitz project. So in both cases, what we've seen is an increase in the amount of capital that we've been spending year on year.

Particularly, I mean, you would have noticed in our results that just over the last half year, it was the highest level of capital ever done for in terms of development, some 17% higher than we've ever done before. And that has continuously been building up. So obviously, that buildup in terms of capital does reflect in the all-in sustaining cost. I think the second aspect of the all-in sustaining cost is critically important.

Is the fact that higher prices do lead to higher royalties and taxes. As we've stated before, is a rough guide, $100 in price change is about $5 on our cost curve. And given that, that's gone up by almost $1,500 since we bought the operation, you can imagine that's also had a significant impact. If we look at it very simplistically, our cash cost today at Stillwater, in other words, excluding all of the capital still remains in the low 500s, which, in fact, is better than it has been over the last two years.

It still has leverage to volume. So as we ramp up, that number comes down and not too different from where it was a few years ago. So the extra 450 that we've seen on top of that is pure capital, of which half of that is project capital. So just that without any benefit of future ramp-ups where we guided to long-term cost in the region of $700 per ounce at current prices.

At lower prices, that number would be significantly lower. And of course, we would still expect the leverage on those prices from increased volumes as we deliver Stillwater East. So in terms of long-term guidance, there's no change on our long-term guidance. The recent incident at Stillwater West has impacted flexibility, and that flexibility impact will remain for about 18 months to 24 months, as mentioned earlier, as we get additional faces back online.

But that's really the only impact. There's no change to the long-term guidance or plan for the operation. Thanks, Adrian.

Adrian Hammond -- Standard Bank Group Securities -- Analyst

Thanks, Richard. Thank, Neal.


Our next question is from Raj Ray of BMO Capital Markets.

Raj Ray -- BMO Capital Markets -- Analyst

Thank you, operator. I've got actually [Inaudible] to you. I just got a couple of questions. First one is on the gold business wage negotiation.

If you can give us some color as to when we can expect any updates on that? And the second question is on your -- the potential to leverage the uranium assets. Just wanted to get a sense of how soon can you expect those assets to be up and running? And also, does that fit within the Sibanye portfolio? Or do you think there's better value to spin it out with value keeping a majority portion of the the SpinCo? How are you looking at it? Thanks.

Neal Froneman

Yes. Thanks, Raj. And let me ask Richard to deal with the gold wage negotiation, and then I'll pick up on the uranium question, Rich. So you go ahead first.

Richard Stewart -- Chief Operating Officer

Thank you very much. Look, we're obviously still in the middle of gold wages. I think we still have a way to go. Fundamentally, as you would have seen from the presentations we've given our underground operations, are running on fairly thin margins, given the cost today.

Ultimately, all stakeholders really need to come around the table to protect those margins and make sure that those businesses survive through the tougher times so that we can all reap the value from them during the good times. This is a process that requires all stakeholders to come to the table. We've had some constructive discussions so far, but those discussions are continuing, I wouldn't like to commit to an absolute time right now. I think it's more important to allow the process to run appropriately.

Thank you.

Neal Froneman

And, Raj, on the uranium question, we haven't made a final decision on what the structure would BEE. We've got a couple of ideas our structure with DRD has worked very well where it remains a separate listed entity where we have a controlling stake we could do exactly the same with our uranium business. We certainly need to retain the credits from, let's call it, the exposure to green metals. So that's under consideration.

If you talk timing, I think you will see movement in terms of, let's say, more definition and perhaps even an announcement as to exactly how that will take place within the next quarter or so. In terms of actually producing uranium, it's probably still two years away. The base uranium mine or Beatrice four shafters got an operating shaft to require some predevelopment, some processing facilities. But on the West bits, we actually have those processing facilities.

There's no doubt some refurbishment. And then there's the biggest challenge on the Westwood is really the position capacity, which is where we work closely with DRD. So that's a couple of years away, but it's certainly much quicker than starting in a complete new mine.

Raj Ray -- BMO Capital Markets -- Analyst

OK. Thanks, Neal. Just one last question, if I may, with respect to your SA PGM, the 175-megawatt solar project. You mentioned that you had completed the feasibility study in Q2.

Is it possible for you to give us an idea about what the capital and what the cost reduction you might see as a result of this?

Neal Froneman

That's -- Rich, would you have any idea you or so of that we haven't really approached it from a cost reduction point of view. But I have no doubt that it will have a positive IRR and therefore, we'll have a cost reduction. But I don't think we've done enough definition on that. Rich or Charl, can you add anything to that?

Richard Stewart -- Chief Operating Officer

Neal, thanks. I think the -- I don't have the exact numbers at hand. I think the only comment that I can make is obviously the financing model that we look at to approach these would be through -- it will be potentially built off our balance sheet with a third party, and we ultimately sign up to a PPA. So it's not a direct capital on us.

It's a long-term commitment. And what I can recall is cost parity was attained within the first year or two. So that's a number I can give. But the absolute side, I can't recall what the absolute capital number was no.

I can get back to you on that.

Raj Ray -- BMO Capital Markets -- Analyst

OK. That's fine. [Inaudible]. Thank you.

That's it for me. And again, congrats on the strong cash flow and then the robust shareholder return that you're providing. Thank you.

Neal Froneman

Thank you, Raj.


Thank you. Our next question is from Leroy Mnguni of HSBC.

Leroy Mnguni -- HSBC -- Analyst

Good afternoon. Thanks for the opportunity. I've got a couple of questions, but really just around two topics. So the first one is just your thinking around dividends versus buybacks or special dividends versus buybacks.

Are we to assume that you'll continue to do buybacks with the excess cash for as long as the share price is well below, what you think is fair value? And then the second topic is the growth around your U.S. recycling business. And I'm just reflecting on your comments, Neal, about the one PGM that may be at risk being palladium largely because of the growth of palladium-rich projects that's coming online. Would this -- how do you see this as different to one of those assets? I'd imagine it's also predominantly a palladium asset.

And then could you maybe give us a sense of whether this growth will be limited to North America? Or would you look to expand capacity elsewhere? And then lastly what are you currently running at in your recycling operations compared to your capacity?

Neal Froneman

OK. Thanks you, Leroy. And Justin, you need to come in on the recycling numbers. But let me answer both those.

And then Justin, you can pop up. In terms of dividends versus buybacks, we have always said that dividends have to be consistent, predictable and have to be industry-leading. And industry-leading at the moment is probably around 10%. But under normalized conditions, anything in a 4 to 5% dividend yield range has been industry-leading.

So we have a target of even when we rerate of trying to achieve that at least 4 to 5% dividend yield. Now that wasn't quite your question. But buybacks are far more opportunistic. And there's no doubt that the research and the work we've done, and we actually got Barclays to help us with our capital allocation structure and positioning of our dividend and buybacks.

But in terms of buybacks, companies that, let's say, do regular buybacks and maintain good quality dividend payments traded a premium to others. That's a given. So the buybacks will continue to be part of the, let's say, the return of of value or the creation of value for shareholders. But of course, if you are at high levels, the decision becomes a bit more difficult.

In terms of special dividends, I think we would have no problem in paying them, but I would see that as fairly of a strategy or any of management to create value. And part of management's job is creating value. So I can't give you an exact recipe. But even the way you frame the question, Leroy, you basically have our answer.

It's going to depend on the share price and so on. But we would like to -- we will not compromise on our dividends. We will try and do regular buybacks. And -- but we'll also be opportunistic with the buybacks.

In fact, there was quite a lot of criticism when we launched a buyback. I can tell you it was probably the best IRR of any investment we've made recently was the buyback. So the suit was well considered and it will have a substantial return. I have no doubt in terms of U.S.

recycling, I think, for now, our focus is that our recycling team is domiciled in the U.S., and we have a very good understanding of that market. And that's where growth will occur. And yes, you're quite right. We need to be considerate of palladium, but I dare say that we -- the cost of producing palladium from recycling is a lot lower from primary sources.

So in terms of your position on the cost curve, we will be at a distinct advantage there. I also want to say that the Sandouville acquisition was consideration was also that it gives us a step into Europe, which gives you exposure to perhaps a slightly different makeup of recycling material. So I think our first goal is to grow in the U.S. and then to grow in Europe as well.

Justin, would you like to add anything that I may have missed out on that.

Justin Froneman -- Regional Chief Financial Officer

Thanks. Thanks, Neal. And, Leroy, very good question. From a capacity point of view, we don't really have a volume capacity constraint per se.

We -- you would have seen in the results book, we fed about 25 long tons per day through our process, and that's pretty much where we are comfortable. Our biggest challenge in the recycling area is managing quality of feed. So we could easily ramp that volume up if needs be. But really, we are focusing on low silica carbide low-carbon bearing material, which to the point you've raised, Leroy, pushes you to palladium-rich catalysts over diesel catalysts.

So the quantity of the absolute volume that a recycling catalyst takes in our smelter in Montana, is fairly small versus the concentrate. Obviously, our Stillwater East ramps up, that capacity will become potentially a constraining factor, but that's in a few years' time. So we have the ability, but it really is a quality focus for margin accretion rather than volumes. -- given, as I say, the silicon carbide constraint that the industry is dealing with.

Leroy Mnguni -- HSBC -- Analyst

That's very clear. Thank, Neal. Thanks, Justin.


Thank you. Our last question is from Tyler Broda of RBC.

Tyler Broda -- RBC Capital Markets -- Analyst

Great. Thanks. Thanks very much for the calls today. So I just had two questions.

One, just on the battery metals business and the new push in this direction. How much capex do you think this will take per year once you get to your strategy toward steady state? And then I guess the second question is just more a bit of a philosophical one or I guess, maybe strategically from a sense that it seems like there's a lot more focus now versus 12 months ago on the battery metals business. We haven't seen anything happen in gold and M&A. Do you implicitly at this point, see better returns as you kind of point out, there's nothing that kind of has made sense yet.

Do you see potentially better returns from this battery metals business than through gold M&A. Thanks.

Neal Froneman

Thanks. And that's, Tyler, I get your name right, Tyler?

Tyler Broda -- RBC Capital Markets -- Analyst

Yes, it's Tyler. Yes.

Neal Froneman

Yes. Yes, Sorry, I can't here on my side. Yes. So obviously, the acquisition strategy is not a strategy in isolation.

And we have made a commitment that our acquisition strategy will not compromise dividend. So our CFO, Charl, is heavily involved in any decision. And of course, we keep a close eye on capital and and those costs as they're going to come through. But we also are -- we're careful not to look at too many projects or greenfield's opportunities.

Of course, in the portfolio, there need to be some. So we are mindful of that, it's a combination of buying, producing assets and maybe some projects. So that's how we consider capex. And at this stage, I can't give you a number, but it's clearly considered as we focus on these.

You're right. There is -- we're not focusing on gold at all. Gold is not at a place where we are going to make a gold acquisition. And we said that probably, I don't know, a quarter ago plus.

It doesn't mean we don't like gold, and you know my views on the combination of gold and other metals. One is industrial and the one is precious. And gold is precious metal that in the risk on, you buy gold. But we're not looking at gold now.

Our focus is on battery metals. We've -- our strategy has crystallized a lot more, as you've seen. And again, we can't give you much more than what we've given because it gives away our competitive edge. But you should have got a feeling that we see how all these blocks are going into the puzzle time.

So that's how we see it.

James Wellsted -- Senior Vice President, Investor Relations

There are a couple more questions on the -- from the webcast, but some of them, I think we have covered. And in the interest of time, we do have a bit of a hard cut off at about five, which is a few minutes away. So I think the last question that I'd like to ask, and I'd just like to again inform people who do have additional questions, please feel free to email us or phone us and will respond or we will be having those Investor Days where we will be dealing with all of the detailed operational and technical and other questions on the 9th of September and on the 22nd of September. So if you can wait until then, we will be covering all of these questions, otherwise, just drop us an email or give us a call.

But probably one that is probably relevant and has been asked a few times, and I'll ask from Barry Davidson in Australia. He says well done on results, fabulous. Congratulations to all Don't forget to greet to your shareholders in Australia. Hi, Barry.

Is the South African government likely to manage the country from here on in a manner which will achieve an economic performance which will maintain social, political and financial stability, so permitting society and business to operate viably. And that's a recurring theme Steve Sheppard asked a similar thing. What's the -- how do we see the evolution of the business environment in South Africa? So I think on that question, perhaps that will be our last question. And then we'll obviously engage further at Investor Day.


Neal Froneman

Yes. Thanks, James, and very greetings. And you're right, we were amiss in not considering their down as part of the good afternoon, and we want to make that mistake again. The events of the last few weeks were actually not unexpected.

As you know, being a previous director of Sibanye, one of the highest risks we had on our risk register was social unrest because of the various elements that feed into that. And I have to say, I was very unhappy that in fact, that risk eventually arose. But a lot of the work we had done because of that risk and the good governance that was in place meant there was really -- there was actually a relatively small impact on our business. Looking forward, I think that we've lost a lot of confidence in our government, and I know it was low before.

To do the right things, at times, we see what looks like good reform coming through, but it is not better with with actions that really are tangible and underpin those reforms. So as business, we continue to, let's say, lobby with government to do the right things, and we will continue to do that. But what is becoming very clear to us is that civil society is starting to trust business much more than they trust the leadership of government. And that's not just the South African thing.

That is something that you're seeing in many parts of the world, I see it a lot in the U.S. as well at the moment. And as business, we try and do things in the national interest. And the lessons learned from the NR key, and I know that's a word that you considered and spoke of many times, and NR key that occurred resulted in something very visible, and that was South Africans got together and made us stand that not in our name is this going to continue.

And the message is that if we are to ensure smooth and sustainable business operations, we've got to do even more. And if we can't rely on government to deliver services and the basic infrastructure we're going to unfortunately have to do more of that. And we really are in a position where we can do more of that, and we've got to, obviously, teach communities to fish rather and give them fish in the same vein. So -- It's still at a two-pronged approach.

It's still engaging with the government trying to get them to do the right thing. I do think they are listening more than they ever listen before. But I wouldn't I wouldn't be overly confident that there's a dramatic change about to happen. But we will look after ourselves and we will ensure that we can operate under these conditions and in this environment, which just makes it so much easier to move to other stable jurisdictions in the rest of the world.

Thanks, Barry, and we should have a check some time.

James Wellsted -- Senior Vice President, Investor Relations

Thank you. I think on that note, we'll call it a day. Thank you all for attending. We really appreciate the interest and the questions, really challenging and good questions.

As I said, we will have our follow-up Investor Days, where we will be covering the detail in September. So please join us for both of those days. Thanks very of those days. Thanks very much.

Duration: 126 minutes

Call participants:

Neal Froneman

Richard Stewart -- Chief Operating Officer

Charl Keyter -- Chief Financial Officer

James Wellsted -- Senior Vice President, Investor Relations

Justin Froneman -- Regional Chief Financial Officer

Patrick Mann -- Bank of America Merrill Lynch -- Analyst

Laurent Charbonnier -- Chief Commercial and Development Officer

Adrian Hammond -- Standard Bank Group Securities -- Analyst

Raj Ray -- BMO Capital Markets -- Analyst

Leroy Mnguni -- HSBC -- Analyst

Tyler Broda -- RBC Capital Markets -- Analyst

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