ARM plat­inum sec­tor buf­fers man­ganese ore, coal de­cline

Pretoria News - - BR | FOCUS - DINEO FAKU [email protected]

AFRICAN Rain­bow Min­er­als (ARM), chaired by bil­lion­aire Pa­trice Mot­sepe, said on Fri­day that its plat­inum divi­sion had helped cush­ion the com­pany from the de­cline in man­ganese ore, man­ganese al­loys and ther­mal coal prices dur­ing the six months to De­cem­ber 2019.

ARM, the diver­si­fied JSE-listed com­pany, said that its plat­inum head­line earn­ings soared by 193 per­cent to R489 mil­lion from R167m in the pre­vi­ous six months as both the Two Rivers and Modikwa mines dou­bled head­line earn­ings com­pared to the cor­re­spond­ing pe­riod.

Av­er­age re­alised plat­inum, pal­la­dium and rhodium prices in­creased by 9 per­cent, 58 per­cent and 97 per­cent, re­spec­tively.

How­ever, head­line earn­ings for the fer­rous divi­sion fell by 13 per­cent to R1.8 bil­lion in 2019 and as a re­sult of lower seaborne ther­mal coal prices, the coal divi­sion recorded a head­line loss R101m from head­line earn­ings of R65m a year ear­lier.

ARM’s chief ex­ec­u­tive, Mike Sch­midt, said that ARM’s fi­nan­cial po­si­tion was ro­bust and closed the half-year at a net cash po­si­tion of R2.86bn at the end of De­cem­ber, from R2.9bn a year ear­lier, and R2.6bn at the end of June 2019.

Cash gen­er­ated from op­er­a­tions in­creased by R140m to R921m. The com­pany de­clared an in­terim div­i­dend of R5, up from R4 in June 2019, bring­ing the amount to be paid to R1.1bn.

“ARM main­tained a ro­bust fi­nan­cial po­si­tion which al­lows con­tin­ued in­vest­ment in our ex­ist­ing busi­ness while giv­ing us the flex­i­bil­ity to pur­sue growth and pay div­i­dends in line with our div­i­dend guid­ing prin­ci­ples,” said Sch­midt.

ARM also re­ceived R2bn in div­i­dends from the Ass­mang joint ven­ture with As­sore, which is in­volved in min­ing iron ore, chrome and man­ganese ore.

Sch­midt said that ARM’s op­er­a­tions came un­der im­mense unit cost pres­sure, mostly from vol­ume de­clines.

The group had ap­proved ini­tia­tives to re­store vol­umes and ad­dress above-in­fla­tion unit cost es­ca­la­tions go­ing for­ward.

“The rein­tro­duc­tion of load shed­ding by na­tional power util­ity Eskom poses a risk to achiev­ing pro­duc­tion vol­ume and unit cost tar­gets, as un­re­li­able elec­tric­ity sup­ply and high en­ergy cost in­creases re­main a se­ri­ous con­cern,” said Sch­midt.

The head­line earn­ings for the fer­rous divi­sion fell by 13 per­cent to R1.8bn in 2019 from R2.12bn a year ear­lier. The group said that the 16 per­cent in­crease in head­line earn­ings in the iron ore divi­sion was more than off­set by a 52 per­cent de­cline in head­line earn­ings in the man­ganese divi­sion.

Sch­midt said three em­ploy­ees had died on duty dur­ing the pe­riod un­der re­view.

“Ini­tia­tives are on­go­ing at the op­er­a­tions to en­sure that safety train­ing con­tin­ues and safety stan­dards are strictly up­held,“said the com­pany.

ARM shares closed 7.81 per­cent lower at R136.49 on the JSE on Fri­day.

Mike Sch­midt

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