Johannesburg - African Rainbow Minerals (ARM) executive chairman Patrice Motsepe yesterday lashed out at politicians over uncertainty in the country’s policy framework.
The tongue lashing comes as earnings of South Africa’s diversified mining company plunged amid the low metal price environment and the company saying it planned to restructure underperforming assets in next three years.
Speaking at the presentation of ARM’s financial results for the year to June, Motsepe said politicians should not change rules midway.
“I hear stakeholders say we incurred costs on black economic empowerment, and you cannot expect us to incur that cost again.”
He was referring to the contentious “once empowered, always empowered” which has seen the Chamber of Mines take legal action on whether the existing charter obliges them to get new black partners if their old ones sold their stakes.
ARM which mines on iron ore, platinum and copper is in dire straits amid falling prices which resulted in a 40 percent drop in headline earnings to R1.05 billion in the year to June from R1.74bn last year.
ARM’s chief executive, Mike Schmidt, said the operations should be profitable even at tough prices.
“An operation which cannot be profitable in the next two to three years has to be restructured. I want to assure you that we will do what is best for our shareholders,” said Schmidt.
ARM’s dividend was 225c a share in the period under review from 350c a share last year. The company said it had cut costs and reduced capital expenditure by 29 percent to R974m from R2.5bn last year.
The company also announced plans to sell its stake in the loss making Lubambe Copper Mine in Zambia at the right price.
The Lubambe Mine, which has been under review, was a drag of ARM’s financials in the year to June owing to the drastic decline in the copper price with the company reporting that it had swung to a loss.
ARM reported R1.64bn impairment at the Lubambe Mine which it operates with Brazilian multinational metals company Vale.
The mine, which experienced operational problems linked to the decline in US dollar copper prices, has led to the mine recording headline losses and requiring continuing cash support from the partners in the current financial year.
Motsepe said ARM and Vale were in agreement on how the mine should be dealt with.
“Ourselves and Vale are in agreement that this is an asset that can be utilised in the hands of a third party. We are looking at all the options including both of us leaving the asset.”
Motsepe said Vale and ARM had spent $400m (R5.6bn) in Zambia.
BUSINESS REPORT