African Rainbow Minerals (ARM), the diversified miner founded by Patrice Motsepe, on Monday joined its peers in reporting lower profits because of weaker commodity prices.
Its headline earnings dropped 20% to R8.9bn in the year ended June year on year, as average iron ore, coal and platinum group metals prices fell, reflecting the slowdown in the global activity.
Average export iron ore prices dropped 13% to $105 per tonne, reflecting the softer demand by China, which accounts for the largest proportion of consumption of the steelmaking ingredient.
The rail capacity constraints at state-owned logistics company Transnet also hampered iron ore, manganese ore and thermal coal volumes, ARM said in a statement.
The inefficient rail infrastructure limiting miners' ability to move the bulk commodities to ports for exports remains a major headache for the industry. However, it is currently being prioritised and addressed through a partnership between government and the private sector.
Total iron ore sales volumes dropped 12% to 14.2-million tonnes. However, manganese ore sales volumes rose 9% to 4.3-million tonnes, but export volumes dropped slightly due to rail capacity bottlenecks.
ARM said unit production costs, however, remained under pressure due to lower production volumes and above-inflation increases in the costs of explosives, diesel, electricity, consumables and maintenance costs.
“Volatility in global commodity markets continues to be driven by multiple sources of uncertainty, including a potential slowdown in growth in both China and the rest of the world,” ARM said.
“Global commodity markets have further been impacted by a series of supply shocks, which have mostly been driven by weather-related events.”
The rand weakened 17% against the dollar on average, softening the effects of the weaker commodity prices.
Its net cash stood at R9.7bn vs R11bn a year ago. A final dividend of R12 per share was declared, down from R20 a share in 2022.
The share price was unchanged at R176.78 on the JSE, having fallen 38% so far in 2023.
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