African Rainbow profit rises despite iron ore slump
A weaker rand has help profits at Patrice Motsepe's mining company rise despite a fall in iron ore prices.
African Rainbow Minerals, the mining company controlled by billionaire Patrice Motsepe, said full-year profit rose 10% after a weaker rand countered lower iron ore prices.
Earnings excluding one-time items were R4.1-billion, or R19 a share for the 12 months ended on June 30 from R3.7-billion, or R17.35 a share, a year earlier, the Johannesburg-based company said in a statement on Thursday. Profit from the ferrous unit, which includes iron ore, manganese and chrome, comprised 91% of total earnings and increased 17% to R3.7-billion.
Benchmark ore with 62% iron content delivered to the Chinese port of Tianjin traded at an average of about $122 a dry tonne in the year through June, 4% lower than in 2013, according to the Steel Index. African Rainbow receives payment in dollars for its exports of the steelmaking ingredient from South Africa. The rand traded at an average 15% weaker in the year against the dollar, helping boost earnings.
“As the US and some European countries continue to show signs of improved economic health and China remains supportive of demand for the commodities that we produce, African Rainbow’s diversified portfolio positions it well to participate in both emerging and developed markets,” the company said.
African Rainbow and Assore Ltd.‘s Assmang unit produces manganese in the country, which has the world’s largest reserves of the steelmaking ingredient. Transnet, the state-owned ports and rail operator, is spending about R16.9-billion on rail lines from the Kalahari Basin to a new manganese terminal at the southern port of Ngqura to meet transport needs of miners.
African Rainbow “and Transnet continue to engage regarding future export capacity and growth for both iron ore and manganese ore”, the company said.
Assore and African Rainbow approved expansion of the Black Rock mine to raise manganese output to 4.6-million tonnes annually from 3.2-million tonnes. About R900-million has been spent on the first phase of the project, with a further R1.7-billion planned.
Earnings at African Rainbow’s platinum unit increased 68% to R883-million. The company has joint ventures with Anglo American Platinum and Impala Platinum.
African Rainbow impaired R510-million on its stake in Harmony Gold after the company wrote off the value of its Phakisa mine in the Free State province by R1.4-billion after saying the expense of expanding the operation was too high.
The company plans to spend R3-billion over the next five years expanding its Beeshoek iron ore mine, raising output to about three million tonnes for at least 12 years. – Bloomberg