Assore posts 200% profit boost on back of commodity rally

ASSORE, a holding company involved in base minerals and metals, posted a 200 percent boost in profits for the 2017 financial year on the back of the rally in commodity prices.

Assore yesterday said that its headline earnings climbed to R5.2 billion during the period compared to R1.7bn in 2016, due to higher profits at Assmang and the exceptionally strong performance of Dwarsrivier Chrome Mine in Limpopo, which recorded a net profit of R843 million in its first full year.

Attributable earnings reached a record R5bn, a 226 percent boost compared to 2016. The company rewarded its shareholders with a final dividend of R8 a share compared to R5 a share last year in line with the improved results.

Assore chairperson Des Sacco said: “Prices for iron ore and manganese ore reflected better world economic conditions and the group achieved all-time record profits of more than R5bn”.

“Underlying market fundamentals remain positive. However, the possibility of additional supply of iron ore, particularly from Australia and Brazil, is expected to have an effect on prices.”

The company said that the markets into which the group sold its products had recovered during 2017 and were generally stronger compared to 2016.

The growth in the production of crude steel in China, which manufactured more than half of the crude steel produced globally, drove commodity prices higher during the year, the company said.

Average iron ore prices were 37 percent higher than in 2016, at an average index price of $70 (R911.30) a ton, while the premium for “lumpy” grade material was $7.38 a ton, marginally lower than the level for 2016.

The higher levels of crude steel production resulted in a marked improvement in manganese ore prices, with the average index price for 44 percent grade manganese content material, delivered in China doubling to $5.77 per dry metric ton unit, from 2016.

Newly appointed Assore chief executive Charles Walters said that prospects for economic growth continued to improve in most regions and underlying market fundamentals remained positive. “But credit tightening in China and weaker sentiment may impact demand and price levels negatively in the short term.”

The industry has faced higher levels of uncertainty following the release of the revised Mining Charter in June 2017, the mining industry in South Africa and the impact of the changes were likely to be negative.

Assore’s assets comprise of its wholly owned Dwarsrivier operation and its 50 percent interest in Assmang, an iron and manganese ore operation in the Northern Cape, which it controls jointly with African Rainbow Minerals.

Assore shares rose 1.33 percent on the JSE yesterday to close at R268.