Patrice Motsepe’s ARM doubles profit from iron ore – but it will close a Mpumalanga mine

ARM's Nkomati mine is preparing to close its doors. Source: ARM
ARM's Nkomati mine is preparing to close its doors. Source: ARM

African Rainbow Minerals [JSE: ARI], founded and chaired by Patrice Motsepe, has reported solid results as stronger prices for its iron ore, palladium and rhodium offset weaker prices for its other products, including platinum, nickel and thermal coal.

Across all its mines, headline earnings rose by 9% to R5.2 billion, while its total dividend for the year to end-June was hiked by 30% to 1,300 cents per share.

ARM says it is maintaining a “robust financial position”, with net cash increasing from less than R1 billion a year ago to R2.6 billion.

Its iron ore division doubled its headline earnings to R3.4 billion, thanks to a 34% increase in the iron ore prices it received, and an increase in output. But the profit from its manganese division fell by 15% and its platinum unit saw its earnings decline by 73% due to lower sales.

ARM has decided to close its loss-making Nkomati nickel mine near Badplaas in Mpumalanga, which it owns jointly with the Russian giant Norisk Nikkel.

“After evaluation of numerous scenarios for the future of Nkomati Mine, it has become clear in the current market environment, that Nkomati Mine has reached the end of its economic life. The joint venture partners have agreed to scale down production volumes and place the open-pit mine on care and maintenance effective from 30 September 2020 in preparation for closure. The Nkomati underground mine was placed on care and maintenance in December 2015.”

ARM's share price has gained more than 26% over the past year. 

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