ARM to build R700m fur­nace

Finweek English Edition - - Companies & markets - DAVID MCKAY

AFRICAN RAIN­BOW MIN­ER­ALS (ARM), SA’s largest min­ing em­pow­er­ment com­pany, is con­sid­er­ing the mer­its of spend­ing up to R700m ex­pand­ing its Cato Ridge fer­ro­man­ganese fa­cil­ity. Jan Steenkamp, MD

of ARM’s fer­rous met­als di­vi­sion, says the ex­pan­sion may get a board rul­ing in July.

If ap­proved, ARM will add a sev­enth fur­nace to the KwaZulu-Na­tal fa­cil­ity, tak­ing pro­duc­tion about 80 000 tons/year higher to about 300 000 tons/year of high car­bon fer­ro­man­ganese al­loy.

Though it sounds ar­cane, fer­ro­man­ganese is used in mak­ing steel and feeds di­rectly into China’s growth story.

“At the mo­ment, we’re just twid­dling our thumbs wait­ing for Spoor­net to give us an an­swer on the rail tar­iff,” says Steenkamp. “There are in­di­ca­tions it will be next month.”

The de­vel­op­ment also helps ARM tick a box in ben­e­fi­ci­a­tion, an old chest­nut Gov­ern­ment has adopted.

An­other con­sid­er­a­tion is whether the mar­ket can sup­port more pro­duc­tion of this metal. The man­ganese mar­ket is small, dom­i­nated by a hand­ful of com­pa­nies and eas­ily dis­turbed.

One fi­nal is­sue, how­ever, is whether ARM can sup­port the ad­di­tional bal­ance sheet stress. Steenkamp thinks it can, but it’s worth not­ing that ARM’s fer­rous met­als di­vi­sion is cur­rently fi­nanc­ing the R3,8bn de­vel­op­ment of an iron ore mine. An ex­pan­sion of the mine could cost an­other R2bn.

Just twid­dling his thumbs. Jan Steenkamp

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