ROBUST: ARM CEO Mike Schmidt speaks about the group’s performance for the year ended June. Picture: MARTIN RHODES

DIVERSIFIED resources miner African Rainbow Minerals (ARM) is going ahead with plans to ramp up its copper, iron ore and platinum operations, it said at yesterday’s presentation of its results for the year ended June.

ARM, which has spent about R20bn over the past five years, is developing the Lubambe Copper Project — previously called the Konkola Copper Project — in the Democratic Republic of Congo.

ARM chairman Patrice Motsepe said production at the mine was expected to be commissioned by the end of the year.

Yesterday, Mr Motsepe announced the completion of the ramp-up of the Khumani iron-ore mine, which is expected to raise yearly production to 16-million tons. Khumani is a joint venture between ARM and JSE-listed ferrous metals producer Assore.

It said it had achieved a significant increase in sales volumes across all its commodities, except ferrochrome and Nkomati Mine chrome ore.

Group CEO Mike Schmidt said sales volumes across all business units were robust over the past financial year, largely due to the performance of the ferrous metals and coal business.

The exception was the Nkomati Nickel and Chrome mine — although the company noted an improvement in operations during the second half of the year.

Mr Schmidt said ARM’s focus was now on reining in costs at the mine. The group will continue to further enhance operational efficiencies to maintain a favourable cost positioning to maximise margins in the challenging price environment. ARM also continues to look at quality acquisitive opportunities, he said.

"All of our costs must be below the 50th percentile, and we hope to bring Nkomati below that," said Mr Schmidt.

For the year ended June, headline earnings rose 2% to R3.45bn ‚ while sales revenue increased 18% to R17.53bn due to increased sales volumes.

The group declared a dividend of R4.75 per share, up 5.6% from the previous year’s R4.50 in the second half of the year.

The slowdown in China has been influenced by demand fundamentals from Europe and the US and the deterioration in export markets.

China’s demand for metals will be dependent on improved regional fixed capital formation‚ urbanisation‚ reurbanisation‚ rebalancing towards consumer spending and decisive reflationary policies, says Mr Schmidt.

The long-term fundamentals of these commodities are positive, as a recovery in the developed markets together with supply side challenges being experienced by platinum group metals producers are expected to provide price support.