Story audio is generated using AI
African Rainbow Minerals (ARM) benefited from a sharp recovery in platinum group metal (PGM) prices in its latest financial year, helping the diversified miner offset weaker performances by its iron ore, manganese and coal businesses.On Friday the diversified miner reported headline earnings rose 19% to R3.2bn in the year to June, while revenue increased 25% to R16.3bn. Net cash rose to R10.2bn from R6.6bn a year earlier.ARM’s PGM operations swung back into positive territory as higher PGM prices saw it move from a loss of R1.29bn a year ago to headline earnings of R1.35bn.The recovery came despite weaker production and higher costs. Two Rivers, ARM’s PGM mine in Mpumalanga, saw production fall marginally, while unit cash costs rose 13%. At Modikwa, a PGM mine in Limpopo, production fell 3% and unit cash costs increased 8%.The performance of the PGM business contrasted with continued pressure on ARM’s iron ore, manganese and coal operations.Earnings from ARM’s iron ore and manganese operations fell 42% to R2bn, with both businesses performing below the previous year. The iron ore business was affected by the closure of Beeshoek mine in the Northern Cape, which was placed on care and maintenance in October.The company said Beeshoek’s closure reduced local sales volumes to 500,000 tonnes from 2-million tonnes and resulted in R124m in retrenchment costs, a R191m increase in the rehabilitation provision and R92m in care-and-maintenance costs.Khumani, an iron ore mine in the Northern Cape, was affected by the stronger rand, reducing the amount the company earned from its exports. That offset some of the benefit from 180,000 tonnes of additional export sales.Manganese headline earnings fell 68% as the stronger rand and lower export prices for manganese ore and alloys weighed on earnings.ARM’s coal division reported a headline loss of R428m, compared with earnings of R47m a year earlier, mainly because of lower coal prices and the stronger rand.ARM strengthened its balance sheet during the year. Cash generated from operations increased to R4.2bn from R45m, while the company repaid debt of R1.9bn. Gross debt stood at R157m at year-end, compared with R2bn a year earlier.The company increased its dividend, declaring a final payment of R7 a share, taking the total dividend for the year to R12 from R10.50 previously.The company also approved two projects during the year, including the development of the 180,000-tonne-a-month Bokoni PGM project after completion of its definitive feasibility study in June. It also gave the green light to the restart of open-pit mining and nickel concentrate production at Nkomati.ARM said rail constraints were leaving some of its iron ore and manganese production capacity unused, limiting the amount it could export.The company said the Ore Users Forum and the Manganese Producers Consortium were working with Transnet on rail and port capacity. Export rail performance improved 1% during the year, while Transnet is expected to issue a request for qualifications in the first quarter of the 2027 financial year for the proposed Ngqura manganese export terminal.Business Day
