JOHANNESBURG – Assore, the chrome, iron and manganese producer, warned that a potential trade war between China and the US would harm steel demand as it announced R2.7 billion of capital expenditure.
Assore, whose chrome, iron and manganese ore are ingredients in the production of steel that are mostly consumed in China, said yesterday that to date it had been unscathed by the recent tariff increases introduced by the US.
“However, further escalation of tensions and a potential trade war could impact global economic growth and demand for steel negatively,” the company said.
US President Donald Trump introduced import tariffs on steel and aluminium in June.
The R2.7 billion capital expenditure would be rolled out over the next few years for the modernisation of Gloria Mine, which produces manganese at Black Rock in the Northern Cape.
The company said the capex would modernise and boost flexibility at Black Rock and see it produce 5 million tons a year.
“Gloria is expected to be shut for six months of the 2019 financial year as part of this modernisation, but sales will be met from inventory which has been built up in anticipation of the shutdown,” said chief executive Charles Walters.
Seleho Tsatsi an investment analyst at Anchor Capital, said for the first time in years manganese was the biggest contributor to earnings at Assore.
Assore, which operates Assmag, an iron ore and manganese joint venture with African Rainbow Minerals, for the year to June declared a final dividend of R12 a share, bringing the total dividend for 2018 to a record R22 a share compared to R14 a share in 2017.
The group’s net cash position increased by 56 percent to R7.9 billion in 2018 compared to R5 billion last year.