DIVERSIFIED mining company African Rainbow Minerals (ARM), is "critically reviewing" all of its operations, after every one of its units, bar its steel-making commodities division, made losses in the half-year to December.
"Almost 95% of commodities that we mine have been experiencing challenges. As a group, we have to review our operations so that we create returns for shareholders.
"But I must stress that we are in a robust financial position, and cost containment, and our balance sheet can help us to stay profitable and to serve shareholders," CEO Mike Schmidt said on Friday at a results presentation.
The group reported that headline earnings for the period fell 51% to R507m. The drop would have been more severe had it not been aided by a R599m profit from its ferrous unit, which includes manganese, iron ore and chrome.
Headline earnings per share of 233c were earned during the period compared with 473c in the corresponding period.
It would continue to pay dividends, despite the pressures on earnings, chairman Patrice Motsepe said at the presentation.
Mr Motsepe said that mining companies across the world had seen their margins slashed by a slump in commodity prices, and a slowdown in economic growth in China, the largest consumer of mining commodities in the world.
ARM operates joint ventures with Anglo American Platinum, Assore, Glencore, Impala Platinum, and Vale. Mr Schmidt said the group had managed to keep the majority of the increases in unit costs at its operations below inflation during the reporting period.
ARM reduced capital expenditure 27% to R589m during the reporting period, which was the first half of its 2016 financial year. It spent R810m during the comparative first half of its 2015 financial year.
Mr Schmidt said that ARM had cut planned spending for the first half of 2016 15% to R1.4bn, mainly thanks to its ferrous metals Black Rock Project, which is its most capital-intensive venture.
Mr Motsepe said ARM would have to cut some jobs at its platinum mines Modikwa and Nkomati, its Beeshoek iron ore mine and its Khumani chrome mine, but it would try to keep job losses to a minimum.
"Every company has a duty to its shareholders, and we need to ensure that we provide them with value. Currently, market conditions are very tough, and we will have to cut some labour.
"We will try to cut expat labour first, as it is more expensive, and we must focus on maintaining our permanent local staff," he said.
Johann Pretorius, a mining analyst at Renaissance Capital, said ARM’s cost management had been impressive, given the challenges facing the mining industry.
CHALLENGE: ARM chairman Patrice Motsepe in Illovo on Friday at the results presentation, where he said the firm would cut some jobs at its platinum mines. Picture: MARTIN RHODES
DIVERSIFIED mining company African Rainbow Minerals (ARM), is "critically reviewing" all of its operations, after every one of its units, bar its steel-making commodities division, made losses in the half-year to December.
"Almost 95% of commodities that we mine have been experiencing challenges. As a group, we have to review our operations so that we create returns for shareholders.
"But I must stress that we are in a robust financial position, and cost containment, and our balance sheet can help us to stay profitable and to serve shareholders," CEO Mike Schmidt said on Friday at a results presentation.
The group reported that headline earnings for the period fell 51% to R507m. The drop would have been more severe had it not been aided by a R599m profit from its ferrous unit, which includes manganese, iron ore and chrome.
Headline earnings per share of 233c were earned during the period compared with 473c in the corresponding period.
It would continue to pay dividends, despite the pressures on earnings, chairman Patrice Motsepe said at the presentation.
Mr Motsepe said that mining companies across the world had seen their margins slashed by a slump in commodity prices, and a slowdown in economic growth in China, the largest consumer of mining commodities in the world.
ARM operates joint ventures with Anglo American Platinum, Assore, Glencore, Impala Platinum, and Vale. Mr Schmidt said the group had managed to keep the majority of the increases in unit costs at its operations below inflation during the reporting period.
ARM reduced capital expenditure 27% to R589m during the reporting period, which was the first half of its 2016 financial year. It spent R810m during the comparative first half of its 2015 financial year.
Mr Schmidt said that ARM had cut planned spending for the first half of 2016 15% to R1.4bn, mainly thanks to its ferrous metals Black Rock Project, which is its most capital-intensive venture.
Mr Motsepe said ARM would have to cut some jobs at its platinum mines Modikwa and Nkomati, its Beeshoek iron ore mine and its Khumani chrome mine, but it would try to keep job losses to a minimum.
"Every company has a duty to its shareholders, and we need to ensure that we provide them with value. Currently, market conditions are very tough, and we will have to cut some labour.
"We will try to cut expat labour first, as it is more expensive, and we must focus on maintaining our permanent local staff," he said.
Johann Pretorius, a mining analyst at Renaissance Capital, said ARM’s cost management had been impressive, given the challenges facing the mining industry.
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