Boom gives ARM record earnings

• Interim headline earnings rocket 134% to R5bn at Patrice Motsepe’s diversified mining group

African Rainbow Minerals (ARM), founded by billionaire business person Patrice Motsepe, expects to reap further benefits from higher commodity prices as developed countries adopt stimulus measures to revive their economies.

African Rainbow Minerals (ARM), founded by billionaire businessman Patrice Motsepe, expects to reap further benefits from higher commodity prices as developed countries adopt stimulus measures to revive their economies, ravaged by the coronavirus pandemic.

Mining is one of the few sectors that seems to have escaped unscathed in the pandemic, which has upended or destroyed many businesses around the world.

On Wednesday, JSE-listed ARM reported record interim earnings, joining other mining groups such as Anglo American and Gold Fields that have reported bumper profits as the prices of commodities they produce rose significantly in 2020.

The buoyant mood in commodity markets was reflected in the underlying share prices on the JSE, with ARM more than doubling from R143 per share a year ago. However, on Wednesday, the ARM share price was down 3.89% to R285.61.

Anglo American hit a record of R623.60 on February 25.

ARM is pinning its hopes on the world’s top commodities consumer China and the US which is to roll out a stimulus package of $1.9-trillion.

“Prices for most of the commodities we produce have been resilient in the past year,” ARM said in its outlook statement.

“While Covid-19 is expected to continue having an impact on businesses globally, prices for these commodities are expected to remain robust in the short to medium term, supported by resilient economic activity in China and significant stimulus measures being undertaken by the governments of large economies, including the US and China.”

Headline earnings surged 134% in the six months to endDecember 2020 to R5bn, thanks to higher iron-ore and platinum group metals (PGMs) prices, and increased export and sales volumes of iron and manganese ore.

Total iron-ore sales volumes were up 6% to 8.2-million tonnes, while export sales volumes were 8% higher at 6.7million tonnes. However, local sales volumes held steady at 1.5million tonnes.

Manganese ore sales volumes rose 4% to 1.9-million tonnes. Export sales volumes were 4% higher at 1.8-million tonnes.

The average, realised dollar export iron-ore prices were 47% higher at $125/tonne, driven by what the company said was robust steel production in China coupled with a global iron ore supply shortage.

The rand weakened 11% to R16.26/$ on average during the review period, from R14.69.

ARM has declared a dividend of R10 per share, which is double that of 2020.