African Rainbow Minerals (ARM) plans to establish an entity that will exploit opportunities in the platinum belt after its profit rose by 10 percent in the year to June.
ARM chairman Patrice Motsepe said yesterday that the company would not acquire the Rustenburg assets put up for sale by Anglo American Platinum (Amplats).
“ARM will not and should not get involved in Amplats assets,” Motsepe said, but the diversified mining house would play a role in the platinum industry through a separate entity.
The vehicle would operate in line with ARM’s strategy, which was to focus on open-cast and mechanised assets that would be profitable and unlock value for shareholders.
“We will create a separate vehicle for platinum. We think we have a duty to South Africa to create jobs, but it has got to make commercial sense,” Motsepe said.
“We are looking at what has happened in Rustenburg. We are a South African company and we’d like to send a message to say we can help.”
Amplats announced last month that it would disinvest from its labour-intensive Rustenburg and Union operations, and it might pull out of two joint ventures.
During the year to June ARM impaired its stake in Harmony Gold Mining by R510 million after the gold producer wrote R1.4 billion off the value of its Phakisa mine in the Free State because it was too expensive to expand the operation.
Motsepe also defended ARM’s stake in the gold producer, saying that it was committed to Harmony’s prospects at its Wafi Golpu mine in Papua New Guinea, which had become a flagship project. “We are not in the industry with a short-term perspective, we are not going to sell our stake in Harmony.”
Harmony had performed poorly in the year under review and ARM did not receive any dividends, compared with the R64m it received a year earlier.
ARM declared a dividend of R6 a share in the year to June, compared with R5.10 last year, the highest since it acquired the Vaal operations in 2003.
Headline earnings rose by 10 percent to R4.1bn, and headline earnings a share increased from R17.35 to R19.
ARM’s diversified nature paid off as profit from the ferrous unit, which includes iron ore, manganese and chrome assets, rose 17 percent to R3.7bn.
A combination of improved sales volumes, a weaker rand against the dollar and a strong operational performance saw the Nkomati and Two Rivers platinum mines increase headline earnings by 91 percent and 88 percent, respectively. The platinum contribution improved by 68 percent to R883m.
However, the coal and copper divisions lost cash.
The copper division’s headline loss widened from R135m to R309m, while ARM Coal went from headline earnings of R148m to a R120m headline loss due to lower export prices and operational challenges.
ARM shares lost 2.64 percent to close at R174 yesterday.