Good morning to all and a very warm welcome to our results and strategic update for the year ended 31 December 2021. There are forward-looking statements in this presentation, so please take note of the safe harbor statement. The agenda for today is safety and ESG first. Those are our single and most important priorities. I will be assisted in presenting that section by Jevon Martin and Grant Stuart. I'll then do a strategic update, which is titled Positioning for Positive Impact and I think you will find that very interesting. We do use our year-end results to provide strategic guidance to the market and our shareholders. I will then hand over to Dr. Richard Stewart, our Chief Operating Officer, who will present the results of the operations in detail.
As you can see, we've called it Operational Excellence. We've had an outstanding year considering all the challenges of COVID and safety and so on. Richard will then hand over to our CFO, Charl Keyter, who will then conduct the financial review, which I think you will also enjoy. An outstanding year from a financial perspective as well. I'll wrap up with a brief outlook and conclusion. As I said, let's start with safety and it gives me absolutely no pleasure to talk about fatalities. We've had a very tough year where we've lost 20 of our colleagues throughout the group tragically in 15 incidents. A majority of those happened in the second half of the year.
We really stepped in and took very decisive actions, including in October, a five-day suspension of all operations across the group, to audit workplaces, refresh safety focus. In December, we actually shut down portions of our operations in the gold sector at Kloof 1 shaft, Beatrix 1 and 3 shafts and then a partial closure at Driefontein to arrest these unacceptable incidents. We had to do the same within our South African PGM business. One of those shafts, Thembelani, was a result of a lack of supervision due to COVID-19 and we just deemed it inappropriate to try and operate with sufficient supervision. COVID has had a very significant impact. At the same time, we conducted an independent review and that review, I'm pleased to say, confirmed the appropriateness of the group safety strategy and its systems.
In fact, it confirmed that it is aligned and consistent with global industry standards and practices. That gave us the confidence that we don't have a flawed safety approach. We did, through that independent assessment, identify opportunities to further operationalize and institutionalize the commitment and responsibility for safety among the line management of the organization. At the same time, we have developed a very comprehensive fatality elimination plan, which is being rolled out and I have no doubt will have a very positive impact on reducing fatality. We are totally focused on our efforts to get to zero harm. I think it's always important when you have these type of dramatic and very serious incidents to look at the underlying data. I do get confidence from the fact that we are clearly doing many of the right things.
It doesn't change the fact that we lost 20 of our employees. If you look at the rate of increase in the left-hand graph of our workforce, you can see the rate of increase in terms of the number of employees in the group is much higher than the rate of increase in fatality. It does mean we are having a positive impact on fatalities. In fact, if you go to the graph on the right-hand side, the fatal injury frequency rate and you look at a three-year rolling average, again, you can see that we are moving in the right direction, which is what inspires us to continue on this road to zero harm. I think it's also important to note that, you know, we do lump all our fatalities together.
We need to remember we have a very substantial PGM division both in South Africa and in the U.S. Of course, we have a large gold business as well. What's very clear to us is that the gold business is challenging, being ultra deep. But we also noticed something else and I've seen references in other CEO presentations too. The industry in general, whether it's in South Africa or in the U.S., is also regressing or regressed in 2021. If you look at South Africa, it regressed by about 22% and in the U.S., it regressed by 25%. There is something behind the current regression that seems to be an international issue regarding safety. Nevertheless, we remain very focused on making a difference.
As I say, we do look for confidence and comfort in the things that we are doing along this journey. If you look at some of the highlights, all our operations received ISO 45001 and 14001 accreditation. We have seen an improving trend in all injury frequency measures since H1 of 2021. Of course, injuries build up to fatality. If you can reduce injuries, you are certainly moving in the right direction. We also had a number of safety milestones, such as at Marikana, we achieved 4 million fatality-free shifts. At Kloof Lower, one of our deepest operations, we went scratch-free for six weeks. Of course, the more you can duplicate this, the more you're going to impact on reducing injuries and hence reducing fatalities.
Then at our surface processing business, we achieved 13 million fatality-free shifts on the sixteenth of September 2021. Those give us the confidence to continue down this very challenging and tough road to zero harm. Last year, I presented our sustainability strategy as a basis for our ongoing commitment to ESG excellence. In fact, the basis of our green metal strategy is based on the sustainability strategy. Last year, I presented building a green metals business and I will just recap on that briefly, shortly. Today what we wanted to share with you in more detail was our road to carbon neutrality. We've made good progress since we made the commitments earlier last year to get to carbon neutrality by 2040. We certainly do believe we can do that much earlier.
We've really made some outstanding progress on water demand and intensity and Grant Stewart will present that to you. Just as I said, I wanted to just remind you of building a green metals portfolio and that's based on building a climate change resilient business. We've made, again, significant progress and nothing has changed in terms of our focus area. As we said last time, we spent two years doing due diligence before we entered the battery metals market. We did four transactions in 2021. Keliber, Sandouville, the Rhyolite Ridge project and the acquisition of a stake in New Century. Just to remind you again, the battery metals together with the PGMs will provide a very significant green metals portfolio. We do intend to complement that with other metals such as copper, maybe manganese.
Uranium is a by-product of gold and we are working on our uranium strategy but nuclear energy is now considered green and therefore the underlying metal must be considered green as well. To complement that, we have advanced our thinking in recycling and of course, tailings retreatment is another area that is similar to recycling. We are increasing our exposure in the circular economy. That's the basis on which we make acquisitions and it's the basis on which we will enhance our green credentials. At this stage, I'm going to hand over to Jevon Martin to talk to you regarding our path to carbon neutrality by 2040. Thanks, Jevon.
Thanks, Neal. Sibanye-Stillwater believes climate change to be the most pressing threat to our planet and global challenge of our time, as recognized by the Paris Agreement and the UN Sustainable Development Goals. As a producer, Sibanye-Stillwater has a role to play in the urgent global response to the threats of climate change and as such, we have aligned our governance strategy, risk management and targets across the group to align with the recommendations of the TCFD. First and foremost, we produce green metals, as Neal indicated, that's supporting the reduction of greenhouse gases and the reversal of climate change. In 2021, we committed to achieving carbon neutrality by 2040 in advance of the requirements of climate science.
Over the last year, we have refined our pathway and supporting interventions have grown in confidence in our ability to deliver on this commitment. In the graph depicted here, we have forecasted our greenhouse gas emissions profile over the life of our mines based on a bottom-up analysis of their production profiles and energy requirements. In terms of business as usual, then we expect a short-term increase in emissions through production growth, followed by a decline from 2025 through life of mine closures and through decarbonization. If we overlay a science-based pathway, we're able to understand the operational decarbonization required to contribute to limiting global warming to 1.5 degrees Celsius and adhere to science-based targets, which we plan to update in 2022, including Marikana and Scope 3.
Through the introduction of demand-side energy management, renewable energy, electrification and fuel switching opportunities, including hydrogen, we are able to demonstrate an active decarbonization pathway. This pathway will be converted to internal annual carbon budgets prescribed at a group and segment level to inform our long-term incentive planning. Recognizing that there will be remnant hard-to-abate emissions towards the end of our carbon-neutral journey, we have compiled a carbon offset strategy that will generate the required offsets to neutralize the remaining emissions. Combined, these elements present a definitive pathway through to carbon neutrality, supported by internal carbon budgets to drive group decarbonization and deliver on our commitments. Due to the infrastructure and extensive energy requirements of our South African operations, combined with the carbon-intensive electricity supply from Eskom, 93% of our group greenhouse gas emissions emanate from grid-supplied electricity.
Eskom also continues to pose risks to our business through above-inflation tariff increases and unreliable electricity supply. The extensive electrification of our operations, however, presents an opportunity to mitigate these risks and accelerate decarbonization through the deployment of renewable energy. Relaxation of regulatory requirements and anticipated ability to trade electricity in South Africa has allowed us to grow our portfolio of renewable projects to 557 MW, including solar and wind projects. We have appointed a local project developer for our SA Gold 50 MW solar PV project and two local project developers for three shovel-ready wind projects across South Africa. Steady progress is also being made in the permits and consents required for our SA PGM solar project. These projects have been structured to limit capital outlay while enabling significant decarbonization and savings benefits.
The total anticipated capital cost of the project is anticipated to be around ZAR 11 billion and will be funded by third parties through power purchase agreements. The projects will enable 25% reduction in Scope 2 emissions by 2025 and deliver substantial operational benefits. We plan to also leverage these projects to promote local socioeconomic development through our Infrastructure for Impact program. The projects will also contribute to closing of the South African electricity supply deficit and bring an end to load shedding to the benefit of all South Africans and the economy. I'll now hand over to Grant. Thank you.
Thanks, Jev. Water stewardship is the use of water in ways that are socially equitable, environmentally sustainable and economically beneficial. We are strongly committed to comprehensive and transparent water governance, effective management of our water at site level and collaboration to achieve responsible and sustainable water use. We have been recognized for these efforts in 2021 by the CDP. In 2021, the South African gold operations purchased 8% less potable water. Our reliance on purchased potable water at our gold operations reduced by some 1,278 million liters or 17% year on year and 344 megaliters or 2.8% in our South African PGM operations year on year. This despite an increase in 4% and 15% in tons treated at the SA Gold and SA PGM operations, respectively.
As we move forward into 2022, we have committed to further reducing our reliance on the integrated Vaal River system, the economic muscle of Gauteng, by 15% from a 2020 base year. During 2021, we remained true to our course of water independence at our gold operations. Boreholes to supply the Cooke plant completed in Q1 of 2020 and boreholes to supply Cooke Two and Cooke Three shafts in Q4 2021 have rendered that complex entirely independent of municipal supply. Ezulwini has also been independent of Rand Water since Q1 of 2021. Although Driefontein is already 90% independent of Rand Water, an extension to Driefontein's 20 million liters treatment plant per day by an additional 5 megaliters per day will see Driefontein's independence from municipal water supply by Q3 of this year.
The Kloof Water Treatment Plant, which forms part of phase one of the operations independence drive, has reduced the reliance of the Kloof by a third, with full independence envisaged by Q1 of 2023. Our efforts to reduce water dependence have not only reduced our reliance on the integrated Vaal River system but has also had a significant saving to the gold operations of some ZAR 85 million per annum or last year rather, with phase two of Driefontein and Kloof expected to bring an additional saving of some ZAR 50 million per annum going forward. Our U.S. PGM operations are located in water-rich catchments and have similar challenges to the SA Gold operations in respect of managing the risks associated with water pumping, treatment of water and the discharging into a pristine environment.
The newly installed disc filters at the Stillwater Mine and East Boulder Mine have demonstrated our ability to move beyond compliance with an average of 30% removal of the total nitrogen and 45% removal of metals from those compliance levels. At the SA Gold Operations, following the installation of the Cooke surface treatment plant to replace the underground treatment strategy, the Cooke number 1 and 2 shaft water quality has shown a 9% improvement in water quality year-on-year. The threat of theft, vandalism and sabotage however remain a concern. On the 13 December 2021, the Department of Mineral Resources and Energy granted Rand Uranium the environmental authorization for the rehabilitation, decommissioning and closure of our Cooke shafts. That's Cooke 1, 2 and 3.
Which means we are a step closer to closing those operations and removing some ZAR 300 million care and maintenance costs from those operations. Neal, I think I could leave it there and over to you. Thanks very much.
Thank you, Jevon and thank you, Grant. As I indicated at the beginning of the presentation, we do use our annual results presentation to provide you with further strategic updates. I want to just start with our existing strategic focus areas or pillars, as we refer to them. You see them in the diagram on the right-hand side. They are well-known. They have been consistently applied and being strategically managed in my mind is very important for success. Of course, if you have a good strategy, you should have exceptional success. I'm very pleased to report that the strategy you see on the right-hand side has resulted in record annual adjusted EBITDA of ZAR 68.6 billion or $4.6 billion. We've achieved 80% higher adjusted free cash flow of ZAR 37.4 billion or $2.3 billion.
That's ultimately or predominantly, I should say, by focusing on safe production and operational excellence and having made the moves that we did make into commodities at a point in the cycle that was very beneficial to our shareholders. I think in addition our capital allocation model has been a good guide and we redeemed our 2022 and 2025 bonds. We replaced that with $1.2 billion notes due in 2026 and 2029. Important, that was done with $169 million of lower interest burden, so it was done at much better rates. You would also see from these results and Charl Keyter will cover this in more detail, we have declared an additional dividend. The total dividend for the year will amount to just under ZAR 14 billion or $866 million for the 2021 year.
That is a 9.8% dividend yield. That is certainly class-leading. In addition, our capital allocation model also refers to share buybacks and some of our shareholders do believe that share buybacks are important. We do as well. In addition to the dividend, we have also purchased 5% of our shares at a share price much lower than where it is today. That amounted to ZAR 8.5 billion or just under $600 million. Again, we've applied our capital allocation framework and model, which is part of our previous strategy and will remain part of the new strategy. The net result is we do have a robust balance sheet with a net cash position of ZAR 11.5 billion or just over $700 million.
Of course, as I've just mentioned, before I hand it over to Jevon, we've more advanced our green metal strategy with four acquisitions. To me that is the result of being strategically managed and that is why we put effort into being at the forefront of understanding the environment and developing strategies that put us in a good spot to create value. Let me talk about the strategic refresh that we undertook late last year. We undertook this strategic refresh with a view to raising the bar and moving our strategy to a higher level. The environmental scan, which is always important in terms of strategy, really looked at the evolution around the industrial revolutions.
What was very clear to us, the industrial revolutions of, you know, the first, the second and the third were good for humanity but they were tough on humans and hard on the environment. There's been an exponential increase in urbanization and with an increase in urbanization, of course, there are climate change issues, there are pandemic issues and clearly we cannot continue in the same way. Certainly the fourth industrial revolution is now rapidly being replaced with the fifth industrial revolution, which is a conscious rewiring and prioritizes the needs of human beings, the environment and society. As you know, from our previous visions and our business purpose, we are a company that is very focused on people and the environment and those softer issues.
This has really been the background to the way we address the strategic refresh. Now, we also know that we have been through incredible change in a very short period of time, plus incredible challenges related to COVID-19. In fact, we've become aware of what we call gray elephants that are gonna shape the fifth industrial revolution. A gray elephant is a highly probable, high impact, yet neglected catalyst or force of change. Not only are these gray elephants a challenge but they're also catalysts for change. We certainly used the COVID-19 gray elephant to change many things, I believe, for the better in our business. Important to note that COVID-19 is a gray elephant and the pandemic was a catalyst agitating and amplifying several other gray elephants.
We've identified them. I'm gonna share them with you now. The bottom line is we must be prepared for these future gray elephants to recognize and take advantage of the opportunities they present. It's not just about challenges, it's about the opportunities that these gray elephants present. Let me just work through them and I will very briefly link them to how they have impacted on our strategy. I've already mentioned pandemics as being a gray elephant that was predicted and no one took any notice of that. We've all experienced how difficult it's been, how it's affected our own personal lives, how it's affected our business and how it's affected many people around us. Very sadly, the World Health Organization predicts a number of pandemics in the 2020s and it's mainly related to urbanization .
These pandemics are highly probable and can come from anywhere. The bottom line for business is if this turns out to be true, we need to develop a business that is pandemic resilient and I can certainly share with you how we do that practically and how we are positioning for that. I think the issue of aging is another gray elephant and the world is aging fast. For the first time in history, there are really more old people over the age of 60 is considered old than younger people that's under the age of five. In fact, there's a 400% increase of people turning 100 and by 2030 older persons will outnumber children aged zero to nine. That's the classification of children.
We need as a business to recognize this and we need to cater for an older workforce. Of course, we link that to becoming bionic and I'll talk more about bionic a bit later. Bionic starts linking to also preparing yourself for being pandemic resilient. One of the better-known gray elephants, although some people still dispute the issue of climate change, is what we refer to as the angry planet. What I am gonna say is just about every one of these gray elephants lead to angry people. The climate emergency has no nationality, no race, no sexual preference and certainly no political or religious affiliation. It's real and the transition we are in will create completely new global tensions. Again, like with most of these things, it's the poorer people in the world that suffer from an angry planet.
As a business, we have adjusted our strategy to build a climate change resilient business and in fact, to provide metals that are at the forefront of reversing climate change. I will expand on that a bit later as well. Inequality is growing. Africa is expected to account for nine out of ten of the poorest people in 2030. Of course, we need to deal with inequality. It does again affect the poorest people. We need to recognize, especially in our South African and Southern African business, that this is a huge issue. You will see from the adjustments to our capital allocation framework, we are going to make a very conscious and significant effort to spend money in social upliftment. The next gray elephant is we call it a big squeeze and the world is being squeezed.
There's absolutely no doubt. From a shortage of fuel, microchips, which we all know impacted the PGM business last year and is still having an impact. Water and food shortages, skill, talent, retirement, inflation and interest rates, we're all being squeezed. If we are gonna address things like pandemics and address the angry planet issues, we need to position our business within like-minded ecosystems where people have similar views and therefore we can work together and we can develop pandemic resilience. We can provide metals and solutions to end users so that we avoid the big squeezes. Another gray elephant and it's common to all of these, is angry people. The act of consuming endless processions of negative online news to social unrest, globally anger is on the rise.
We have to address this by creating shared value and developing a common purpose. Angry people are either going to make us or break us. We cannot ignore things like inequality, big squeezes where, again, poor people are affected the most and multipolarity. I think this last week or so, we see globalization unraveling. Russia is in the Ukraine, testing the West's resolve. China will increase its competition directly with the U.S., power and influence will shift. Again, it's about positioning our business like we have in like-minded ecosystems, such as building our battery metals profile in Europe and North America. That's practically how you deal with that. The next gray elephant is intelligent advances and this is really about advances in robotics, artificial intelligence, machine learning and that's ushered in a new age.
We can do what we did in previous industrial revolutions. We can introduce this without due concern to people. That will be exactly the wrong way to go. We need to introduce this intelligence and technology in a way that is constructive and recognizes people. We talk about being bionic, where we focus on the people aspect. You can see how these concepts have a lot of commonality and have informed our strategic thinking looking forward. There is the complete picture and we have revised or refreshed our strategy to take account of these gray elephants. We are very clear on what we need to adapt for. As I said, our previous strategy has been very successful and it does not mean we're throwing it out and have started with a new strategy.
In fact, we have developed what we call a three-dimensional strategy, keeping the good from our previous strategy but also developing something that is going to differentiate us in many respects. The first thing, our strategic foundation hasn't changed. Our purpose used to be improving lives through our mining. I think the purpose has been refined to safeguard global sustainability through our metals and energy solutions. Our vision used to be creating superior value for all our stakeholders. The vision has been slightly refined to be a leader in superior shared value. We've introduced the word shared value for all stakeholders and to support climate change reversal. Those are higher level purposes. That is our higher level vision. Of course our CARES values, commitment, accountability, respect, enabling and safety remain our values.
Of course, ESG and shared value actually becomes even more dominant. That is our strategic foundation. That's why we exist and that is what we want to impact on. That is very similar but we've raised the bar. Now, you would probably most of you would have seen Larry Fink's letter to CEOs. I must say it was an excellent letter. Larry's one of his comments is most appropriate. It's never been more appropriate for CEOs to have a consistent and a clear purpose. There you see it. There is our impact and our strategic foundation. Just moving on to things that currently sit in our current strategy. We believe they've become strategic essentials. You have to ensure safety and well-being. You don't have to make that a strategy.
You have to prosper in every region in which you operate. That doesn't have to be a strategy. That is a given. Achieving operational excellence, which was a very important part of our previous strategy, is a given that has to continue. Optimizing long-term resource value has to continue. Maintaining a profitable business and optimizing capital allocation, those are administrative issues. They are not strategies in their own right. They have to be. They are a given. What is new? Again, it's almost a slight repositioning. Now, these are the strategic differentiators. These are the new aspects that we will focus on and have elevated some of the strategic focus areas from our previous strategy. First of all, ESG excellence, that is being refined into being recognized as a force for good.
I know that many companies use this force for good but I think based on our purpose and our vision, you can see the underlying substance behind being recognized as a force for good. Building a global portfolio of green metals and energy solutions that reverse climate change is gonna differentiate us. We have a unique combination of battery metals and a very substantial PGM business that will in future underpin the hydrogen economy. Taking account of some of those gray elephants, we have to become more inclusive, we have to become more diverse and bionic and I explained the importance of those. That really enhances our cultural change initiative.
Of course, building pandemic-resilient ecosystems and being part of those ecosystems are what's also going to allow us to prosper in regions such as Europe and North America but also not be disrupted by pandemics. It's gonna be important to provide metals that are necessary to reverse climate change in those ecosystems. Those are our strategic differentiators. Just in case you were wondering, have we covered all the gray elephants, this matrix shows you that every gray elephant is covered, in most cases, by more than at least two of these strategic differentiators. I'm comfortable that the environmental scan and the refresh strategy will certainly take account of these and will put us on the front foot.
At this stage, I'm going to hand over to Richard, who will go through the really good results that were achieved at an operational level. Thank you, Richard.
Thank you very much, Neal and good afternoon and good morning, ladies and gentlemen. It's a real pleasure today to be able to share with you our operating results from the second half of last year. I think as many of you would have been aware, we recently published our updated mineral resources and reserves as at the thirty-first of December. I think just to highlight before we get into the details, that we have had a change in the way that we report our mineral resources and reserves and this has specifically had an impact on our South African operations. Where historically, we reported attributable resources and reserves based on an effective financial interest, whereas now we are basing that attributable number on an effective legal or equity interest .
As of course, the financial liabilities do change year on year. I think very important to highlight this has got absolutely no impact on the underlying resources of the reserve numbers for the operations, neither does it have an impact on the financial exposure Sibanye has to these assets. It is just the attributable portion that changes. I think very pleasing in the numbers is that at both our South African PGM and our U.S. PGM operations, we saw a slight increase in reserve numbers, which effectively means our ongoing exploration more than replaced what we depleted during 2021. In our gold operations, we saw about a 700,000 ounce decrease in total reserves, on a 100% attributable basis, so marginally less than what we depleted during the course of last year.
The 72.5 million ounce reserve base that we have underpins a very sustainable portfolio. Our South African gold operations have lives of mines that vary from four years at Beatrix to in excess of 10 years at Driefontein and Kloof. Our gold projects have lives well in excess of 20 years. Our PGM operations generally have lives well in excess of 15 years, with our U.S. operations in Rustenburg in particular, having lives well beyond 30 years. A very sustainable portfolio and underpinned by a significant mineral resource base, for future replacement and growth. I think also very exciting is, for the first time, we are declaring resources as a result of our entry into the green metals last year.
In particular, our lithium resources at our Keliber project in Europe and our Rhyolite Ridge project in Nevada, maiden resources for the first time there and zinc as well through our exposure to New Century Resources in Australia. Our uranium resources in South Africa remain unchanged and those are currently under economic studies. Of course, we also report our copper resources in Argentina, in South America at our Altar project. Moving on to our South African PGM operations, very pleasingly, they continued with a great performance during the second half of last year. Total production from these operations amounted to just in excess of 940,000 ounces for the half year, 5% higher than the comparative period the year before.
I think particularly pleasing was the strict control that we maintained over our costs resulted in a nominal 1% lower unit cost year-on-year. For the year, we came in at around ZAR 17,000 per 4E ounce. We sold just under 960,000 ounces of PGMs and that was at an average basket price of just over ZAR 40,000 per 4E ounce, marginally higher year-on-year. This equated to a free cash flow out of these operations for the second half of the year of just over ZAR 8.2 billion, significantly higher than the comparative period last year and a very healthy 54% adjusted EBITDA margin, despite the drop off in the PGM prices toward the back end of 2021.
Our sustained and very disciplined focus on costs has meant that we have seen our operations gradually move down our cost curve and we now have a portfolio of PGM assets that sit squarely within the second and third cost quartiles. I dare say I look forward to seeing that move to the left continue in the years to come. An important announcement at the beginning of this year was the agreement that we reached with Anglo American Platinum, on the PSA transaction, on the PSA assets. Essentially, what this transaction is about is that we will ultimately take over the infrastructure of the PSA, including the rehabilitation liabilities.
How the transaction will work is that those conditions or the transaction will close once we have delivered 1.35 million ounces into the PSA under the current PSA terms, as well as got the required regulatory approvals from Competition Commission and the DMRE. Important to note is that the 1.35 million ounces that actually started counting from January of last year. As of the beginning of this year, there was marginally under 900,000 ounces that still needed to be delivered. Once these conditions have been fulfilled, we will then take over the infrastructure and the POC arrangement will convert into a toll arrangement on terms similar to the current Rustenburg toll. I think this is a transaction that's created significant value for all stakeholders.
In the short term and immediately, it allows the PSA to consider mine planning across mine boundaries. That, of course, allows us to optimize operational flexibility and efficiency through those mine plans. I think in the medium term, it allows or it creates an additional 1.8 million ounces of reserves at Rustenburg. This was effectively ground that couldn't be accessed through Rustenburg infrastructure that will now be mined through the PSA infrastructure. In addition, a lot of the Rustenburg reserves that were going to be mined through Rustenburg infrastructure at the back end of the life can now be extracted far earlier through the PSA. Of course, for local stakeholders, a key value is that we've almost doubled the life of the Kroondal operations, with the longest life shaft being extended for up to 16 years.
Of course, that means sustained employment and optimal return out of this infrastructure, which benefits all stakeholders. For Sibanye-Stillwater, we estimate that this transaction has about a ZAR 6 billion value uplifter for our company. The U.S. PGM operations had a tough second half to the year and this was following a very tragic, fatal accident that we suffered in June. The production out of these operations was approximately 270,000 ounces for the second half of the year, which was about 11% lower than the comparative period in the year before. The lower production output, combined with inflationary pressures and rising inflation in the U.S. environment, together with the need to bring in higher contractors to supplement skill shortages that we're suffering in the area.
All resulted in a year-on-year 18% increase in unit costs to just over $1,000 per ounce for the year and just under $1,040 for the second half. The operations battled with several operational constraints during the fourth quarter in particular, which largely have been dealt with. But in the medium term, we will continue to suffer constraints, predominantly as a result of revised operating procedures post the fatal accident. What that has really meant is that we cannot have people in rubber-tyred vehicles operating in rail ends at the same time as railed equipment. This has had a significant impact on our mining efficiencies, particularly at Stillwater West. That is likely to continue into the medium term until such time as we have fully installed proximity detection systems that will allow us to operate under a new procedure in that area.
In addition, I think like much of the U.S., Montana currently has a very low, in fact, a negative unemployment rate. As a result of that, there is a dearth of skills in the region at the moment and attracting skills and experiencing high attrition rates on our employee and workforce has been a challenge during the course of the year. As a result of these constraints and we do foresee them continuing into the medium term, we will be reassessing what the optimal output, operational output is from the Stillwater assets over the coming months, taking these constraints into account, as well as our forecast for the medium-term palladium market conditions.
Pleasing me was the conclusion of a three-year wage agreement at East Boulder, which was a sustainable agreement and my compliments to the team and the unions for a constructive engagement during that process. The PGM recycling continued to deliver significant value despite some real challenges during the second half of last year, particularly logistic challenges associated with COVID and moving spent auto catalysts around the country. In addition, there was also a significantly reduced amount of vehicle scrappage due to less new car sales as a result of the chip shortages that we saw during the course of last year. That meant in total, we fed just over 350,000 ounces during the half but we were also able to process a significant amount of our inventory.
Therefore unlocking working capital of about $380 million over the period. Our recycling inventory at the end of the period was at about 25 tons, which we see normalizing around 200 tons as we built up during the course of this year. This output resulted in just over $50 million of adjusted EBITDA, with an additional $9 million of interest earned from advances to our recycling customers. Moving on to our South African gold operations. Under the circumstances of some very tough safety interventions, self-imposed many of them. Under those circumstances, our gold operations managed to sustain a steady output and produced for the half just over 550,000 ounces, which was 4% lower than the comparative period to last year.
The lower output and significant inflationary cost pressures, in particular from Eskom, steel and chemicals, as well as catching up capital in the form of ore reserve development and sustaining capital that was underspent during 2020 as a result of COVID, resulted in a total 16% increase in unit costs to ZAR 814,000 per kilogram. Gold production was 3% lower and at 10% higher costs and that combined with an average rand gold price of ZAR 860,000 per kilogram, some 11% lower than last year, resulted in our EBITDA being ZAR 2.8 billion or just under half of what we achieved over the comparative period. Nevertheless, this is still an 18% adjusted EBITDA margin. As many of you would be aware, we are continuing with wage negotiations at our South African gold operations.
In December of last year, modeling that was undertaken on our TSF together with ourselves and our engineers of r ecord identified a risk due to excessive pore pressures at our Beatrix tailings facility. This modeling, combined with the excessive rain that we were experiencing at the time, led us to make a decision to stop deposition onto this tailings facility until rehabilitation work had been undertaken. That rehabilitation work includes the building of a buttress wall in the area recognized as high risk on the tailings dam. We anticipate that this rehabilitation will be completed by the end of March. During this period, underground production is continuing at Beatrix and that ore is being stockpiled and we expect to be able to treat all of that stockpiled ore during the second and third quarters of this year.
In terms of annual guidance, starting off with our U.S. PGM operations and clearly taking into account the constraints which we are currently operating under, we forecast production for this year to be between 550,000 and 580,000 ounces. As I mentioned, this is currently being assessed to determine what the optimal output should be in the medium term. All-in sustaining costs at those levels would equate to around $1,000 per 2E ounce and capital is estimated at around $300 million, which includes $70 million of project capital. Our U.S. recycling is forecast to be largely flat at between 750,000 and 800,000 ounces. Similarly, at our South African PGM operations, we're forecasting flat production at between 1.75 and 1.85 million ounces at a cost of between ZAR 18,500 and ZAR 19,000 per 4E ounce.
Capital at our PGM operations is marginally higher at ZAR 4.7 billion and that includes ZAR 1 billion of project capital being spent on our K4 project. At our South African gold operations, we had a self-imposed safety stoppage at Beatrix. Beatrix operations only commenced production in February of this year. As a result, we are lowering guidance for our gold operations to between 25 and 27 tons of gold. The lower production and the stoppage at Beatrix does mean that we are anticipating higher unit costs and currently we're forecasting between ZAR 875,000 and ZAR 925,000 per kilogram. Capital is marginally lower, having caught up much of the ore reserve development and SIB capital last year from 2020.
And that is forecast at about ZAR 5.2 billion and includes ZAR 1.5 billion from Burnstone project and ZAR 350 million for the continuation of our K4 defined project. Thank you very much and I will now hand over to Charl for the financial review.
Thank you, Richard. Good afternoon and good morning to all participants on the call. It once again gives me great pleasure to share the excellent financial results with you for the year ended December 2021. Next slide. Starting with the income statement, revenue increased 35% from ZAR 127 billion in 2020 to ZAR 172 billion in 2021, following the continued strong performance of PGM prices. Interesting to note, compared to 2019, revenue increased by ZAR 100 billion or 136%. Cost of sales were up 33% from ZAR 76 billion in 2020 to ZAR 101 billion in 2021. Most of the cost increases, excluding the year-on-year above inflation increases in labor, electricity and consumables related to an increase in recycling costs of ZAR 14.8 billion, which is directly linked to the increase in the recycling PGM basket price.
The recycling PGM basket price increased from $2,200 per 3E ounce to about $3,500 per 3E ounce. The balance of the cost increases was due to the very profitable, albeit higher cost of purchase of concentrate at our SA PGM operations amounting to ZAR 3.2 billion. The result of the aforementioned is that EBITDA increased 40% year-on-year to ZAR 69 billion. If we now turn our attention to the standout items for the year, net finance expenses were down from ZAR 2.1 billion to ZAR 1.3 billion in 2021, mainly due to lower average debt for the period and higher cash balances. For the period, we recognized a loss on financial instruments which were mainly made up of the following. A ZAR 4.7 billion loss on the Rustenburg deferred payment was realized.
The loss is primarily driven by the significant increase in the 2021 actual profitability, the balance being changes in the future consensus PGM input prices used to value these liabilities. Just as a reminder, this liability is calculated at 35% of distributable free cash flow generated by the Rustenburg asset over a six-year period ending in December 2022. The balance of the loss on financial instruments were due to the Rustenburg and Marikana BEE share-based payment obligations that increased ZAR 1.3 billion, also driven by the changes in future consensus PGM input prices. A write down or impairment of our SA Gold assets of just over ZAR 5 billion was recognized at year-end.
At 31 December 2021, a number of factors, including above inflation wages and electricity prices, were identified that negatively impacts the ability of the Driefontein, Kloof and Beatrix operations to recover the carrying value of mining assets over their respective remaining life of mines. Additionally, an assumed long-term gold price forecast and this is based on sell-side analyst consensus of approximately 750,000 ZAR per kilogram or $1,500 per ounce in real terms, negatively affected the forecast cash flows from these operations. This led to the recognition of impairment losses at the Driefontein, Kloof and Beatrix reportable segments. Royalties at ZAR 2.7 billion and mining and income tax of ZAR 13.7 billion increased 54% and 183% respectively.
The increase in mining and income tax was due to the significant increase in profitability and the recognition of the previously unrecognized deferred tax asset at Marikana. After accounting for all of the aforementioned, profit amounted to ZAR 34 billion. Headline earnings for 2021 were approximately ZAR 37 billion compared to ZAR 29 billion in 2020. Headline earnings per share for the period was 1,272 cents per share. Next slide. The debt and liquidity maturity profile highlights that we now have a deferred low risk maturity ladder. At period end, the $600 million and ZAR 5.5 billion RCF facilities were fully repaid and the only outstanding debt with recourse to the balance sheet was the $1.2 billion bond issued in November 2021.
It is worth noting that the bonds that were issued in November was not only upsized to $1.2 billion but will also result in an approximately $170 million of interest or coupon savings on a like for like basis compared to the 2022 and the 2025 bonds that were issued in 2017. The U.S. dollar RCF matures in April 2023 and the rand RCF matures in November 2024. These will be extended or refinanced well ahead of these maturities. Liquidity headroom at the end of the year stood at ZAR 48 billion and consisted of ZAR 30 billion in cash and the balance of ZAR 18 billion in undrawn facilities. Next slide. The dividend momentum was maintained at the upper limit of our dividend policy.
The final dividend for half to 2021 was ZAR 1.87 per share, bringing the full year dividend to ZAR 4.79 per share. A 30% increase year-on-year and a yield of over 10%. Returns to shareholders for the 2021 year amounted to ZAR 22.3 billion and was split ZAR 13.8 billion in dividends and ZAR 8.5 billion in share buybacks. Thank you. Next slide. This table illustrates the clear value proposition of Sibanye-Stillwater looking through the lens of return of capital to shareholders. From a dividend yield perspective, Sibanye-Stillwater came in at the number one position, closely followed by our South African PGM peers. If we include buybacks and we look at total returns to shareholders on an absolute basis, we still came in at the number three spot.
However, measured in market capitalization, Sibanye-Stillwater ranks in the number six position of the gold and PGM peers presented on the slide. Moving on to the next slide. We continue our disciplined delivery on all aspects of our capital allocation framework. Looking at the performance for 2021, we achieved or exceeded our capital allocation priorities as measured in each of the capital allocation buckets. We have further refined our capital allocation framework and I would like to highlight two additions to the capital allocation framework. The first is the renaming of the dividend bucket to the stakeholder shared value bucket. The change here is that we have looked at various funding mechanisms for social upliftment projects and to ensure that this is based on profitability and aligned to our other important stakeholder, being our shareholders.
We have decided that at each dividend declaration, we would like to set aside an amount equivalent to 1.5% of the dividend declared to fund these extremely important ESG initiatives. The second change or addition is the inclusion of a new innovation and market development research and development fund named the BioniCCube. This was agreed to by the board of directors and on an annual basis, we will allocate up to 1.5% of EBITDA, subject to strict investment criteria. We believe that these two important factors further strengthens our disciplined capital allocation. I would now like to hand back to Neal, who will take us through the outlook and the conclusion. Thank you, Neal.
Thank you, Richard and thank you, Charl. I'm going to just complete the presentation with a brief outlook and conclusion. There are experts in PGMs. There are experts in battery electric vehicle forecasts. I don't intend to try and portray myself as an expert. We understand the supply and demand side of these metals very clearly. I don't want to repeat what is obviously good work done by many other people. I do want to provide you with our view at a high level regarding perhaps a slightly different view. We believe PGM demand will remain well supported well into the 2030s. It's predominantly because internal combustion engine vehicles have a substantial future, much more than what I think is being given credit to.
It's because the forecasts of the penetration rates of battery electric vehicles is, in my view, substantially overstated. Yes, I do know that a lot of this is being legislated but when we are not able to provide the metals required for batteries, I do suggest that governments will revisit their legislation to take account of that. In addition, there are tightening emissions regulations which will support PGM demand. I would also say that I do believe that technology regarding internal combustion engines will also improve. The growth in heavy-duty fuel cell electric vehicles will also underpin PGM demand. In the longer term, the hydrogen economy will really provide that demand underpin post-2030. The outlooks for PGMs remain constructive and robust.
As I've said on the battery metals, there's a very aggressive market forecasts and those are gonna be tempered by battery metal supply constraints. I think, you know, we talk generically about lithium and nickel but there are very specific requirements for battery grade lithium hydroxide that's already in a deficit in 2021 and that deficit is going to deepen substantially. Nickel prices and nickel sulfate is of course the requirement for battery precursor. Nickel is at all-time highs as demand clearly outstrips supply. I do see major constraints and I do think, despite nickel prices being elevated, despite lithium prices being high, these are still lows in this battery metal cycle. Let me then conclude and you will notice the heading is Adapt or Die.
As I said right at the beginning, our strategies have served us very well and they've in fact delivered the results that you've seen today. Our strategic delivery, we do what we say we will do. It's not always popular but we do what we say we will do and it's really worked to our benefit. We've delivered record annual earnings. We have a well-timed entry into the green metal sector. As I've said, I believe there's a lot of upside on battery metal prices, which is also gonna constrain the penetration rates of battery electric vehicles. We're delivering on all elements of our capital allocation framework. You've seen that in terms of our dividend. You've seen that in terms of our share buyback.
You've also seen refinements to our capital allocation framework and very importantly, together with shareholders, we are making commitments to invest in social upliftment to avoid angry people and be a force for good. You've also seen us enhance our approach to market development, research and development through our BioniCCube fund. We've been very focused and disciplined on M&A. If we can't grow in the battery metal space because we can't create value, we won't do it. We will not compromise on value and achieving our hurdle rates. I think you've seen clear evidence of that. Our new refreshed strategy is enhanced and it's enhanced our strategic positioning for future resilience and I believe success. It's a class-leading strategy. It's a 10-15-year strategy. We've raised the bar in just about every area that we have a strategic focus.
I have no doubt we will be a force for good. Larry Fink in his letter, which you can read on the internet, he said, "I believe the decarbonizing of the global economy is going to create the greatest investment opportunity of our lifetime. It will also leave behind the companies that don't adapt, regardless of what industry they are in." I think Larry Fink is spot on and we are certainly going to be one of those companies that prosper in this environment. At this stage, thank you for your time. I hope you found all the submissions and presentations interesting. I am going to hand over to James Wellsted to facilitate the question-and-answer session. Thank you, James.
Thanks, Neal. As usual, we'll start with the questions over the webcast and then we'll go to the phones once we've been through a couple of questions that come through online. The first one, I think for you, Neal, is Wayne Klugo. With the current lithium price at its all-time high, is Sibanye likely to exercise its option to increase its current investment in Keliber? And if so, when?
Yeah, thanks, James. Wayne, good question. As I said in my presentation, even though, you know, some of these commodities are getting to all-time highs, the shortage, the future shortage or constraints in these commodity markets means that these are not the highs and there is a very significant upside, especially for the right quality of these metals. In other words, if they're produced in the right form and in the right market. We will certainly be progressing our route or process to control of Keliber. I would suggest that would happen as we complete the feasibility studies and probably within the next six to nine months, that should be complete.
Thanks, Neal. I've got a couple more questions. Just these two are really similar on the Appian transaction. I'll ask from Tyler Broda first. Can you provide some color on what's happened with the Appian transaction and why you decided to not complete it? And then what out clauses did you have in the sale and purchase agreement? Maybe you wanna answer those first and then I'll ask the rest.
Yeah. Certainly. Thanks, James. Tyler, simply put, most M&A transactions have a clause that if there's a material adverse change or effect post the signing of an agreement, it's your right as a buyer to exit the transaction and that's exactly what happened. There was a geotechnical event which we deemed as material and because Serrote and Santa Rita were joined in the same transaction, we exercised our right on a material adverse effect clause to exit the transaction.
The next part of Tyler's question. Do you see this affecting your ability to transact with other companies in future? Linked to that, now with prices running, do you see more potential for M&A? And if not, do you expect excess cash to come back to shareholders?
First of all, I see absolutely no reason why this should affect our ability to do further transactions. These things do happen. Of course, I think from our shareholders we will have full backing because, you know, the valuation considerations were very disciplined. In terms of pricing, I think I answered that in the previous question and alluded to it in the presentation. Although commodity prices are high, there are going to be severe constraints. I think we can look forward to much higher commodity prices. That does not mean we will assume much higher commodity prices in making our decisions regarding whether something is value accretive. The perception that we're at all-time highs and this is the peak of the market in battery metals is completely wrong. Sorry, there was a third part to that, James.
I've just deleted the question. I think it was about returning excess cash to your shareholders. Yeah.
Correct. Look, I think we have presented our capital allocation model and we've shown that we've applied a very disciplined approach to returning cash back to our shareholders and stakeholders. Now, we are not going to declare exceptional discretionary or extraordinary dividends at this stage. We have useful proceeds. If we get to a point where we cannot find, let's say, external growth opportunities, we cannot create value through organic growth within our business, of course, we will return it to shareholders. We believe our current dividend yield is industry-leading. We believe we are providing a fair return to shareholders and if we have excess cash, we will use it for other purposes until we hit a dead end on those processes. No, there will be no additional returns at this stage.
Thanks, Neal. This is from Ahmed Hakim. He was just asking whether, in view of the recent claims and statements by Appian, could we provide more detail on the geotechnical events? I guess more importantly, what is your confidence level that you're legally secure?
Ahmed, thanks for that question. Look, the one thing I wanna state up front is we are not going to litigate on this issue in the public domain. That's not proper. It's not appropriate. I think, first of all, we've got a high degree of confidence in our rights, in the fact that that was material. Really that is the amount of detail that I am going to supply. Just to summarize, we have a high degree of confidence and we believe the geotechnical event was very significantly material. Thank you.
The next question from Wade Napier. Neal, I guess you could or perhaps Richard as well. What levers do the SA Gold assets have to reduce costs in the event that the mines turn free cash flow negative? The second part is relating to the share price having increased by 50% year to date. Does this change how management might think about funding M&A? That is, would we be willing to issue shares to fund future M&A?
I'll ask Richard to answer the gold question. Let me deal with the share price increase and whether we would use that as let's call it currency in any M&A. Certainly we acknowledge the increase in our share price. It's pleasing. I would also suggest, though, we're still significantly undervalued. The use of shares at this stage is highly unlikely. I think there's substantially more upside in our share price and perhaps higher values that may make sense. Now, I need to qualify that and say it depends also on the target. If our relative share price is trading at a higher premium than the target, then of course it makes sense to use our currency. In general, I would say we are still significantly undervalued. Rich, do you wanna deal with the gold question?
Yeah, thanks very much, Neal. Well, Wade, I guess there are a couple of triggers you can pull in these circumstances. What I would say the key ones are obviously having a stable production output is critical and I think that is a base that we started establishing again last year after many years of disruption, be it strikes and COVID but that's the first critical one. Secondly, we obviously have a capital profile that is designed to support the current life of mines, which as I highlighted earlier, Beatrix is four years and Kloof and Driefontein, 10 years. You know, under a very depressed environment, those life of mines would have to be looked at and of course, then capital is a lever you can pull. That is a long-term decision.
I think in the short term, you know, the two key aspects we need to focus on is one. We have a very aggressive overhead cost focus at the moment and we do have several programs in place to try and reduce that. And then the final one is really managing our operating footprint. We do have many of our footprints. Cooke is a good example, you know, where the care and maintenance and pumping costs of Cooke are currently costing us around ZAR 600 million a year. And that is really a regulatory process to go through to be able to close those. Managing and reducing our operating footprint can have a substantial impact on costs and therefore on the sustainability of jobs as well.
Certainly managing our footprint and rehabbing together with other stakeholders is a key element to keeping those costs down. Thanks.
Thanks, Richard. This question from Adrian Hammond. Well, two questions really. Potential size of claim from Appian, can we provide that? Will we need to make a provision?
Charles, you can answer the provision part of the question. Adrian, I think that's a question you must direct it at Appian. We are not aware of a specific claim as of yet. We've swapped letters but I would ask you to address that to Appian. I just wanted to just come back to the gold question that Wade asks and just add on to what Richard said, is we will not run our gold business and bleed to death should we have large negative cash flows. I just wanted to make that point. Charles, I believe there is a note in the financial statements but over to you.
Thank you, Neal. Adrian, no, at this point in time, there's no requirement to raise a provision. I mean, there's just still too much uncertainty. The only time that you do raise a provision is where you have certainty. You know, if this gets to a position where we have certainty on a claim or a judge makes a decision on that, at that point in time, we'll consider raising anything but for now, nothing.
Thanks, Charl. For Richard, from Adrian, the last question. Can you expand on the new strategy from Kroondal? What is the life extension and will it remain a mechanized mine?
Yeah. Thanks, Adrian. Yes, it will remain a mechanized mine. Certainly there's no intention to change the mining method. The infrastructure still remains as is and of course, that is to support that mining method. Essentially what the strategy is, you know, Kroondal sort of mine down to the depth extent of what that mine boundary was and in some cases also to lateral extents. Really what we have the ability to do is now to drop those boundaries, continue down with a bit of depth, as well as continue laterally into the adjacent Rustenburg ground. Really what the strategy is to optimize the mine plan, seeing the Kroondal property or the old PSA property and the Rustenburg property as one. That is really the strategy.
In terms of extending the life, most of those shafts, without having done this transaction, most of those shafts would have come to an end of their life in around 2024-2025, where it just wouldn't have been able to carry itself as a standalone unit. By doing that, by completing the transaction, a lot of those shafts will now continue well into the latter part of this decade, 2028-2029. As I mentioned, with some of the shafts, Bambanani 9 in particular, actually being able to continue for 16 years. It is about our original strategy with putting contiguous assets together. Dropping mine boundaries allows you to optimize surface infrastructure, underground infrastructure and therefore mine plans. Thanks.
Thanks, Richard. I'll just ask one more question, then we'll go to the phone lines and then we'll come back to the online questions. Just a question from Luyolo Mkentane from Business Day. He's referring to the strike ballot report that the CCMA produced that's been distributed to the media and just asking for a response on that, Neal.
Yeah. I think it's safe to say that if you look at those numbers and I'm not familiar with exactly what's been circulated to the media but certainly, as you've seen, Solidarity is not in support of a strike. When I look at the numbers, I don't see UASA in support of a strike. When I look at the split across NUM at Beatrix is not in support of a strike. NUM within the West Wits is in support of a strike. Of course, AMCU is in support of a strike. I must also point out that if you consider a balloting process fair when people stand in a stadium and raise their hands and the sample is, you know, somewhere around 15, maybe 20%.
I don't think that's indicative of a fair balloting process or representative of the workforce. Irrespective of the balloting process, we will not be changing our offer. Our offer is final. Really, the union or this coalition needs to decide whether they're gonna strike or not. We are not raising our offer and that needs to be very clear. Thank you.
Thanks, Neal. Just to point out what Neal was referring to, there were 8,024 employees who voted in this ballot process and we employ about 31,000 people at our gold operation. It's a very small segment of that population. Maybe if we could go to the phone lines for a couple of questions.
Thank you very much, sir. The first question comes from Catherine Cunningham of JP Morgan.
Thanks, guys. Just two questions from me. The first one is just could you perhaps talk in more detail around the sources of cost inflation across the group and maybe just elaborate on where that differs between the SA gold operations and then the SA and U.S. PGM operations. The second question is, in the event of tighter sanctions explicitly impacting Russian palladium exports, how do you see the supply picture panning out in that scenario and are you aware of any disruptions to palladium exports to date? I guess linked to that, to what extent, if at all, would you anticipate that ongoing conflict in Russia/Ukraine could negatively impact global auto supply chains and therefore impact demand for metals from the OEMs?
Okay. Thanks, Catherine and Rich, if you can pick up the inflation point. I'll just start off on the issues regarding Russia and the Ukraine and sanctions. Catherine, it's a good question. I think, let me start by saying, I think you're gonna see a lot of volatility initially with a lot of speculation. However, I think the facts are that Russian palladium, which is really, I think the metal that we should focus on because it's significant in the Western world, Russian palladium is mostly used in Europe. If there are tighter sanctions or sanctions specifically imposed on Norilsk Nickel, I think the impact will really be in the short term on Europe.
Having said that, I also believe that there will be alternatives to someone like Norilsk Nickel in terms of supplying metal to friendly countries, which means that you will probably see a change in market dynamics. Of course, what is short in Europe will probably then flow from countries that take Norilsk's palladium that are being supplied by the Western world. I think supply will sort itself out in the shorter term. I think I'm much more concerned with the second part of your question, which is about supply chain disruptions. We are aware that Ukraine supplies a number of car companies with wiring harnesses and there's been major disruptions to companies like Porsche and Volkswagen and of course it'll increase . Those are the obvious ones.
Then just like COVID, I think, there are a lot of hidden supply chain disruptions that are unfortunately probably gonna impact on demand more so than supply being constrained. Of course, as I've said, you will get speculation and volatility in the initial phases of something like this. From our point of view, our heads are down. We have our customers. North America is pretty much independent. We produce North American palladium for North America and of course, our other palladium goes to our other customers around the world. Thank you. Rich, over to you.
Thank you very much, Catherine. Yeah, look, I think generally there's been inflationary pressures across the board but to highlight some of the bigger ones, clearly in South Africa, electricity's been a big one. Steel has been quite a big one, which impacts, for example, on a lot of our stores materials, our support, as well as our engineering infrastructure. Labor, of course, we are still operating under historic agreements. Those increases have been above inflation. Of course, that's built into our forecasts but it does still result in above inflation increases and hence the need to bring that in line with inflation. Then finally, chemicals that we use in our processing and also fuel.
To distinguish between the gold and the SA PGMs, you know, the gold operations are far more exposed to power and steel in particular, deeper level vertical shafts, big electricity exposure. Our PGM operations in particular have a higher exposure to fuel price, given that a lot of them are mechanized operations. I think it's important just to note and I'm not quite sure if that was part of the question. Well, the reason that we managed to contain costs in the SA PGMs was not so much around the fact that they were not impacted by inflationary pressures. They most certainly were. Through the realization of synergies and through the cost-cutting initiatives that we've had, you know, we were able to work out those above-inflationary cost pressures.
It wasn't that the two operations were differently exposed but more that we had more of an opportunity to cut the costs on the PGM business. Thanks.
Awesome. Thank you. That's clear.
Thank you. The next question comes from Leroy Mnguni of HSBC.
Hi. Good afternoon, guys. I've got a few questions, please. The first one is, if I look at your reserve assumptions, they've gone up about 23% for the basket price. Neither in the Kroondal and Mimosa additions, your reserves haven't really gone up by much. If you could maybe unpack that, I'm wondering if it's linked to cost inflation. For the Brazilian acquisition that you walked away from, would you be open to settling on a lower price than what you had initially agreed, if that goes down that road? My third question is a cheeky one but I'll try my luck. Norilsk Nickel has underperformed quite significantly and could potentially be in your reach. It certainly has the metals that you are looking for from a battery perspective. Is that something that you would consider as an acquisition?
Rich, why don't you do the reserves first?
Perfect. Thanks very much. Thanks, Leroy. Yeah, listen, on the reserve side, no, it hasn't got to do with cost. We have revised our pricing assumptions and perhaps just to unpack or explain that a little bit, historically, reporting under the SEC, we were bound to report with three-year trailing averages. Under the new S-K 1300 that's come out, you know, we can now look at setting our own price base as long as, of course, that's justified and realistic. As a result, we've really looked at through-cycle prices to guide our resources and reserves. The key for that is we, of course, wanna make long-term decisions on those price decks. It really is about trying to optimize prices through the cycle.
The reason it doesn't have a specific impact on the PGM operations is the reserve price deck that we used previously and that we're using now. There's still significant margin in those operations. As you would know, the PGM assets have got a fairly constant grade. So it's not like, unlike gold, for example, where different prices allows you to mine lower grades, you can mine it selectively. In PGMs, the grades are far more consistent. So just the fact that we still have that margin really means that it doesn't have a significant impact on your reserves. Where there was a small impact is when we get right into the tail of these operations and then slightly higher prices might allow you to continue for a little bit longer.
It's not a material increase in reserves for that reason. Thanks, Leroy. Thanks, Neal.
Thanks, Rich. Leroy, your second question on Appian, I just wanna say again, we're not gonna litigate in the public domain. But I don't wanna say no comment all the time. But we walked away. We didn't take the decision lightly. There's been a material adverse event, so we've walked away. So the answer is no. Is Norilsk a target? Listen, Norilsk is a wonderful company but it doesn't sit in a jurisdiction that is of interest to us. We have really targeted building our ecosystems or our presence in ecosystems in Europe and North America. So no, it is not a target.
Thanks. Thanks for the responses. Appreciate it.
Thank you. The next question comes from Nkateko Mathonsi of Investec. Nkateko, your line is open. You can ask your question.
Oh, good afternoon. Can you hear me now?
Yes, we can. Please go ahead. Thank you.
All right. Super. I have two questions. The first one, the background is around the SA PGM operations which continue to outperform and Marikana is proven to have been a great acquisition and so is Rustenburg. In contrast, the output out of the USPGM and costs is not anywhere close to the initial expectations. My question is, what has been your key involved as far as the international non-Africa operations are concerned? I mean, when I look at some of your peers, I think they're also still going through teething issues as far as international operations are concerned. Your growth and green strategy probability is it will likely be in international grounds, as you've just highlighted now. How do you avoid this wide gap, in particular on operational assets between expectation and actual reality once on the ground?
That's the question. The second question is around recycling. I noticed that purchased tons declined by 3% year-over-year and the feed tons declined by 10% year-over-year. I just wanna know if there are capacity limitations on your side as far as recycling is concerned and also just to get your outlook as far as recycling, global recycling, is concerned. Thank you.
Yeah. Thanks, Nkateko. Rich, will you deal with the recycling? I'll deal with the, I couldn't quite hear your question but the point you made was that our South African acquisitions, PGM acquisitions, appear to have done very well and you're quite right. They were smartly structured. They were acquired at the right time. Your concern is that the U.S. operations don't look like they've worked. Let me correct your perceptions. We have not met, let's say, our plans. That is very true. There's been a couple of headwinds. But the U.S. operations are exactly what we bought. They are no different to our, let's say, initial assessment. I haven't recently done a calculation but I do believe they've paid for themselves. Again, the acquisition was done at a point in time similar to the South African PGM businesses.
We've had a real benefit of profitability and obviously based on commodity prices. The quality and the attributes of the U.S. PGM business are exactly what we have expected. I think our changes to the plan are really taking account of, let's say, conditions that are very different to pre-COVID conditions. Yes, there's been some technical issues in terms of flexibility and ramp up but they are very different issues regarding the availability of labor, which is something more recent and the costs associated with using contractors. We will apply a very different business model and I have no doubt that it'll be extremely profitable and it'll continue returning value back to our shareholders. Operating in the U.S. has been an absolute pleasure.
I have no doubt that operating anywhere else in Europe, Finland and France will be an absolute pleasure. I don't foresee I wouldn't put all these challenges we've had in or perceived to have had at Stillwater in one basket and say working internationally is hard. I can tell you it's much harder to run our operations in South Africa. Yes, they've performed well and that's good. We remain, let's say, bullish on our ability to operate in all areas around the world that we will obviously choose. Rich?
Yeah. Thanks, Neal. Nkateko , thanks very much for your question. Listen, if I understood it correctly, the decline that we had in our recycling numbers during the second half of the year wasn't capacity linked. It was more driven by supply chains being able to transport cats, truck driver shortages in the U.S., et cetera and lower scrappages of cars. It wasn't a capacity constraint. As it stands, we're not capacity constrained at our processing facilities. There is a mix that we do need to consider with recycling. In other words, we blend our recycling material with our primary material. And we do manage that to optimize recoveries and costs and throughput. There is a link there but it's not really a capacity constraint.
That is obviously a link we can play with but that is a blend issue that we do address. I think in terms of your question regarding our views on global recycling, listen, I think during the pandemic, well, combination of both the pandemic and supply chains being disrupted globally, combined with the lower scrappage of cars, that's been a global event with new car sales being down as a result of chip shortages. We do see that recycling recovering over the next year or two and building back up to similar levels as what it was prior to COVID. It has been a depressed secondary market for the last two years but we see that recovering from this year going forward.
Okay, thank you.
The next question comes from Robert Sennott of Seaver Hill Capital .
Yes. This call, this question is directed to Neal. Neal, what is your position on silver? The Sibanye-Stillwater has every card in the deck to form a royal flush but silver. I wanted to find out from you your thought on pursuing and getting involved in the other precious metal that you don't have interest in right now.
Yeah. Thanks, Robert. Good question. We do like silver. Silver is not only a precious metal, it's a metal that has, in my view, a strong technology and industrial underpinning. We have looked at silver. In fact, we've looked at silver as a way of entering the North American gold business. As you know, many of the silver opportunities have gold by-products. It is something we'll continue to look at and it is a metal we like. We like its fundamentals. Robert, perhaps I can just leave it there. Yeah. It is of interest to us, yes.
Thank you for that information. Yeah, it's very much a green metal, Neal. Very much a green metal. I just appreciate all the good work you folks have been doing with your M&A and how your business is turning out and really appreciate the dividends that you're paying to shareholders. Thank you for your good work.
No, thank you for those very kind comments. I agree with you 100% on silver being a green metal. Thanks, Robert. We'll look further into it.
Thank you. The next question comes from René Hochreiter of NOAH Capital Markets.
Good afternoon, Neal and team. Thanks very much for taking my questions. Just two quick questions. What is the progress on K4 shaft? When do you think the extra production will come in? And would it be expansion or would it be replacement of those ounces? And then secondly, I hear what you said about palladium and eventually the supply sorting itself out and the price sorting itself out. But what if it doesn't? And you know, the palladium price now stays up at $2,750 or wherever it is now and then it doesn't come down. Do you think that will be a trigger for really starting to substitute platinum for palladium?
Yeah. René , yeah, I think, let me deal with the palladium. We're gonna just try and get Robert van Niekerk on standby, who's running K4 project, to give you definitive answers. Rich and I can do it but probably at a higher level. On your question on palladium, absolutely. If palladium prices stay high, you will definitely see substitution taking place. I have no doubt. I suppose, you know, that is good for us on both sides. As you know, we have a 50/50 palladium-platinum pool split, if I could call it that, in our company. Yeah, I do see, you know, substitution becoming a reality if the palladium price stays high.
My view is that, as I said earlier, it'll wash itself out in terms of alternatives, you know, in terms of markets that are not, let's say, sanction constrained. Rob, if we could get you online just to answer Rene's question on K4 and I trust you heard that.
Neal, I did hear that. I just wanna confirm that you can hear me.
Yes, we can hear you clearly.
Okay. Good afternoon, René .
Hi. Hi, Robert.
K4 project commenced round about the middle of last year after the internal authorization process and so on we went through in our organization. I can report that the project team is fully staffed up. The EPCM contractor is in place and performing in accordance with expectations. The work schedule or progress is as per schedule for the last six months. Development will commence in quarter two of this year. We've been very fortunate with K4 because K4 is supported by a very very large PGM base. The base being Rustenburg, the base being Kroondal and the base being Marikana. We haven't had to go out and recruit people and train them up for K4.
We've been privileged in the fact that we can actually take, for want of a better word, you know, the best of the best from the other platinum operations and deploy them at K4 and fill the positions they leave at the other operations. You know, that has really been the approach we've taken to date. The K4 operation is progressing as planned, René , in a nutshell.
How many ounces could we expect as expansion ounces and by when?
At steady state, K4 is gonna produce approximately 250,000 ounces a year. That is, from both the Merensky and the UG2 reefs and that will be in four years from now.
Great. Thanks very much.
Thank you. Thank you, Neal.
Yeah, thanks, René . Nice talking.
Nice. Thanks.
Thank you. The next question comes from Chris Nicholson of RMB Morgan Stanley.
Hi, good afternoon, everyone and thank you for the call. A couple of questions from me. The first one is just on your Marikana BEE structure. I understand that you've got kind of two components there, the Sibanye and the other Marikana shareholders. Could you confirm if the other Marikana shareholders are now unencumbered and are fully participating in dividends in that operation? The second question, just to follow up on the Kroondal profile. I understand you've given some guidance there in light of mine, which we appreciate. What does the decline rate look like? I would imagine that post-2023 it's not gonna be producing at the 450,000 ounces it has been. How do we anticipate those ounces running off? Thank you very much.
Thanks, Chris and hi. Rich and Charles, can you deal with the BEE?
Yep.
Rich, probably with the Kroondal decline rate in terms of output.
No problem. Chris, thanks very much. Listen, the absolute details of that BEE transaction we can get to you. It wasn't that during the restructuring they were all completely unencumbered but the liabilities were completely restructured. Some of the other parties did still have liabilities associated with it. The exact numbers I don't have offhand or where they sit at the end of this year. It wasn't that they were all completely unencumbered, no. There were still some but I'll get the exact numbers to you, Chris. In terms of Kroondal, listen, you're 100% correct that there is a roll-off. You know, I think Kroondal's sort of peak production is 450,000 ounces. There are one or two shafts which will still come to an end and we will optimally mine those from other areas.
We will in the next couple of months be putting out our detailed resource and reserve statements together with our annual report. That'll certainly show a full profile for those operations on the back of the new life of mine. The Kroondal life of mine has been done with this transaction in mind. Chris, we'll be able to share those details with you in the very near future as we publish those numbers.
Thanks.
Next is a follow-up question from Adrian Hammond of SBG Securities.
Thanks very much for taking my further question, Neal. Just a bit on strategy. You mentioned in the past targeting battery metals and PGMs and gold equally in terms of EBITDA. Is that still the case? As you've been aggressive with your M&A in the past year and largely shifting more to manufacturing, is there a scenario in the future where you think you would separate or unbundle the South African mining assets from your endeavors offshore? Just on safety, which is obviously a sore point, one of your peers has recently closed a shaft due to seismicity. Is this sort of potential options that you are facing as well? Thanks.
Yeah. Thanks, Adrian and good to talk to you live. Yeah. Listen, ideally we would like to have a, you know, an equal split in earnings across battery metals, PGMs and gold. Obviously we've got a long way to go in achieving that. It would be very nice to triple our earnings based on what's happening with PGMs. That is certainly still our broad intention which means we need to grow our battery metals business. It also means we need to grow our gold business. Unbundling certainly is something we consider or are familiar with. I think there's a right time to do that but it's not something that's under consideration now. We understand the value release with something like that.
The benefits of a large balance sheet, the flexibility we have with you know different commodities allows us to really consider building something that is unique and very sustainable. In terms of safety, absolutely, if our safety incidents were due to seismicity and with the difficulty of predicting seismicity, we would certainly close the shaft. Our safety incidents have not been due to seismicity. Let me say, whatever they are due to, we will have no hesitation if we are unable to produce safely, we'll have no hesitation but to close shafts and we showed that last year. It's not due to seismicity, Adrian. If it was, absolutely, the answer is yes, we would close them. I hope that answers your three questions.
Yes, sure. Thanks, Neal.
Thank you. There are no further questions from the lines.
Thanks. We'll go back to the webcast then. Question from Craig Martin, I think for Richard. Could we elaborate on the mineral resources report where in the group overview we show PGM ounces as well as PGM at 100%, so the attributable and the 100% and the same with other minerals. Which column represents mineral resources as they apply to Sibanye-Stillwater shareholders?
Yeah. Thank you very much, Craig and listen, I actually don't have the table in front of me but what I can say, the 100% column you see is essentially the resources, the ounces of the resources or reserves that sit within the project or the operation that they refer to. That is essentially 100% and year-on-year, that makes the comparisons easy. What we previously looked at was we declared our attributable portion of that. Where we have minority shareholders and as I say, it's most applicable in South Africa, where we have empowerment partners, we have an equity stake at a project or a company or a mine level, we previously declared our effective economic interest in that.
If we had financed one of our minority shareholders and half of that had been paid back, on a 26%, you know, we obviously then would have declared, they would have, well, 30 less, so 87%. What we're saying now is what we're declaring is the 74% in that example. We are only declaring attributable to ourselves the actual equity interest that we have directly in those resources and reserves and those are the balance of the columns that you see in the statement. As I highlighted up front and just to stress again, it doesn't change the resources or reserves within a project, neither does it change any economic interest we have. You know, I think the shareholdings and the various empowerment structures, et cetera, that we have in place have obviously been disclosed.
None of that changes. Just for simplicity's sake, we now declare our resources and reserves purely on our equity and that shouldn't change year-on-year. I hope that assists, Craig but we'd be happy to take it offline and work you through it if easier.
Thanks, Richard. Just for your information, Craig, the column to the left of the 100% column is the attributable portion to Sibanye-Stillwater shareholders in that report. Just to clarify that. Question from Richard Hatch, can we quantify what kind of production impact we can expect at the U.S. ops versus the original plan? I think Richard or do you wanna cover that?
Yeah, Rich, go ahead.
Sure. Richard, I think, listen, that is clearly still work in progress. I mean, I think the guidance we put out today and I'm sure if you looked at the math compared to what we put out or what we achieved during the second half of last year, you will see that really that is just flat guidance. At the moment, operating under all of the constraints that we currently have and all of the excess costs that we have incurred with extra contractors, et cetera, you know, that almost, I guess, to an extent, paints the bottom line, the worst case scenario. Our original targets through ramping up the Stillwater East project was to attain about 850,000 ounces per annum.
What we're really doing is saying what is the optimal output which would be between those two lines to really operate within the constraints we have but also set our cost base up to deliver in line with that output. I wouldn't like to speculate right now on what the outcome of that work is going to be. It is work that is being undertaken at the moment and as mentioned, we are looking to have that completed around about middle of this year. I guess I can share with you what those boundaries are, you know and that's really been the guidance we're given, which is as we operate today under those constraints and it's precisely about dealing with those constraints in the new plan that we're looking at. Thanks, Richard.
Thanks, Richard. This is more of a statement from Dominic O'Kane. This was a very exciting presentation. Thank you. The clarity of strategic focus and laser sharp implementation and delivery is truly commendable. Keep up the good work, Mr. Froneman and team.
Thanks, Dominic. We pride ourselves on being very strategically managed and strategically focused. I think you know, all credit to the team on the delivery of the results. I think the results are the ultimate measure in whether you've been successful in your strategy. We appreciate the comments and I'm sure the rest of the team has heard it as well. Thank you.
Thank you, Neal. A question from Abhi at Deutsche Bank . Have you seen any change in the behavior of PGM customers? Are there new inquiries from the customers? Also, is there any slack you have in the system? Thanks.
Yeah, I'll let Richard answer that.
Any change in customers, I think not on a sustainable basis. Of course, there's a lot of volatility in the market and yeah, we do get short-term inquiries, you know, based on market volatility. You know, I think importantly, our overall marketing strategy is less about trying to be a trader in the market and more about building long-term relationships with customers in supply chains. That inherently means that we do have slightly less exposure to the volatility. James, apologies, could you just, there was a second part to that question.
It was about any slack in the system, Richard.
Okay. Any slack in the system, I'm assuming you mean around demand and supply at the moment? I really didn't know. Listen, I think at the moment, certainly there's still strong demand for all of our metals. Slack in terms of having excess metals, no. I think at the moment, we certainly finding that the demand remains high, if that's what you're referring to. Thank you.
Well, we're just drawing to an end of the presentation. I'll just quickly deal with a question from Siphelele Mdudu, asking about the litigation process timelines. There is no litigation process at the moment. As Neal said, we've exchanged letters but there's no formal process in place. So I hope that answers the question. Neal, this one's probably valid. Is uranium dead in South Africa or are you involved in project assessment work?
Yeah. Uranium is definitely not dead in South Africa. We sit on probably some of the best reserves, I would say in the world, when you consider that some of our uranium reserves are on surface and are part of a dump where we can extract both the gold and the uranium. Uranium is still a target for us. It's not a high priority. It is still being worked on. It's more complicated because it forms part of a broader base of assets. That is introducing some complexity. We remain very bullish about the long-term future of uranium and the classification of nuclear energy as green energy and the very disruptions you've seen with renewables as base load energy just doesn't work. We've always been proponents of nuclear energy has a place.
We continue to work on that. It's not dead in the water. It's just not a high priority.
Thanks, Neal. I've got a couple of technical questions but, I think let's leave it at that. It's 2:10 P.M. We'll respond to those questions by email. We've got your email addresses, so we'll respond directly to you. I think on that note, I'll pass over to Neal just for some closing remarks.
Yeah. Thanks, James. Again, thank you to all of you that took time to join us, listen to us. I hope you found it interesting. We look forward to more delivery. Of course I'd like to thank my team as well. An exceptional set of results. Really, I'm very proud of what has been achieved. Thank you very much and enjoy the rest of your day.