Mid-tier mining and materials company Afrimat says its full-year results are expected to be lower due to losses from cement and a weaker-than-expected performance from anthracite.
Changes in the iron ore market, the rand value received on iron ore exports and the volume reduction from ArcelorMittal SA (Amsa) in the first half severely affected Afrimat, it said in a statement on Monday.
In its construction materials unit, Lafarge SA — the group’s most recent acquisition — has successfully been integrated into the company.
A strong performance by the traditional aggregate quarries and ash business will ensure that the aggregates segment achieves a better result than last year, it said.
“The cement operations were successfully revitalised and are now functioning at acceptable levels. Afrimat is regaining market share, and the trend remains positive,” it said.
The cement kilns have received extensive maintenance and are operating both efficiently and dependably, ensuring that Afrimat can operate with backup capacity.
The industrial minerals business has made a significant recovery and was back to its previous performance levels. The suspension of load-shedding and optimistic signs of economic growth, boded well for that business, it added.
In the bulk commodities division, Afrimat has made extensive progress at Nkomati and part of the Environmental Impact Assessment (EIA) for the full Life of Mine Plan has been received.
Aside from the EIA allowing for more optimal open-pit mining to take place, Nkomati has introduced a more efficient mining fleet; reorganised the mining team, including a new management structure; moved an Eskom power line to allow for more fluid open-pit mining; relocated 91 graves and 38 houses and increased marketing activity on the export bouquet.
Underground mining operations were relocated to a safer area and together with gains from the actions taken, Nkomati returned to profitability in January, and February is expected to yield a similarly positive outcome.
No secondary products were exported in the latter half of the financial year due to the closure of the border with Mozambique, which restricted access to the Maputo port. This led to a delay in export shipments.
The border has since reopened, and Afrimat has secured commitments for up to 80% of the new financial year’s export volume. Poor rail performance continues to affect export iron ore volumes, it said.
“Volumes align with the previous financial year, which is good news to an extent because volumes have not deteriorated, and a good relationship remains in place with Afrimat and its subsidiaries’ marketing partner. However, overall volumes remain 20% below Afrimat’s rail allocation.”
International iron ore prices remained lower than in the prior period, though they had been increasing slightly over the past six weeks.
Local iron ore volumes suffered a 70% retraction in the first quarter due to significantly reduced volumes taken up by Amsa. But for part of the second quarter and the second half, volumes recovered well.
“Afrimat remains in active and constant discussions with Amsa to understand their requirements fully and to support them with innovative raw material solutions irrespective of the longs business’ operational status,” it said.
In its future materials and metals unit, the test work on the rare earths component was nearing completion and showing positive results. The phosphate plant was now operational, with ramp-up progressing well, though slower than projected, Afrimat said.
Management remained confident that the majority of the company’s metrics had turned and boded well for a better financial result in the coming year, it said.
The group said it will update the market in April once management has greater certainty about the company’s financial position.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.