African Rainbow Minerals: Iron ore up, manganese and PGM down
African Rainbow Minerals has reported that headline earnings for F2024 decreased by 43% to R5 080 million. The decline in headline earnings was mainly due to the decline in the average US dollar 6E PGM basket price and the lower thermal coal prices. This was partially offset by a weaker average rand/US dollar exchange rate and higher average realised export iron ore prices.
The average realised rand weakened by 5% versus the US dollar to R18.70/US$ compared to R17.76/US$ in F2023. For reporting purposes, the closing exchange rate at 30 June 2024 was R18.25/US$ (30 June 2023: R18.90/US$).
ARM Ferrous headline earnings were 9% lower at R5 058 million (F2023: R5 528 million), driven by a 90% decrease in headline earnings in the manganese division. This was partially offset by a 19% increase in headline earnings in the iron ore division.
Iron ore headline earnings include a R22 million(pre-tax) negative fair value adjustment on sales(F2023: R279 million negative adjustment). The fair value adjustment comprises a R28 million positive fair value based on confirmed prices and a R50 million negative fair value adjustment based on forward prices.
Lower headline earnings in manganese ore were mainly driven by a decrease in the average realised US dollar manganese ore prices, adjustments in sales mix arising from lower grade products being sold as well as increased railage tariffs. This was partially offset by higher sales volumes and the weaker rand/US dollar exchange rate.
Lower headline earnings in manganese alloys were driven by lower sales volumes due to lower demand, a significant decrease in ferromanganese prices and an increase in provisions for onerous contracts and restoration.
Higher headline earnings in the iron ore division were driven by an increase in average realised US dollar iron ore prices, slightly higher sales volumes, as well as the weaker rand/US dollar exchange rate, partially offset by higher mining costs and higher railage expenses.
ARM Platinum headline earnings decreased 162% to a headline loss of R910 million (F2023: R1 465 million earnings). Two Rivers Mine headline earnings reduced to R168 million (F2023: R1 262 million), which includes a negative mark-to-market adjustment of R193 million (F2023: R1 065 million negative mark-to-market adjustment).
The decrease in headline earnings was mainly due to a 33% decline in the average basket price and a 17% increase in unit cash costs (on a rand per 6E PGM ounce basis). The above-inflationary increase in unit costs results from increased milling of Merensky ore.
The Merensky ore arose out of the development of the Merensky shaft and came at a higher cost than UG2 ore.
Modikwa Mine reported a 115% decline in headline earnings to a headline loss of R121 million (F2023: R819 million earnings), largely driven by a 35% decrease in the average basket price. The mine’s production increased marginally, while unit cash costs (rand per 6E PGM ounce) increased by 6%.
Bokoni Mine reported a headline loss of R566 million (F2023: R406 million) driven mainly by the mine ramping up to its first PGM ounce production. The first PGMs were produced in November 2023, and unit cash costs are within the range expected from production ramp-up. Bokoni results were included for 10 months in F2023, following its acquisition on 1 September 2022, compared to the 12 months included in F2024.
Nkomati Mine reported an attributable headline loss of R391 million (F2023: R210 million). This was driven mainly by an increase in the provision for rehabilitation in F2024 due to higher water management costs arising from the water treatment plant. The mine was placed on care and maintenance on 15 March 2021. ARM and its joint-venture partner have concluded a purchase and sale agreement. ARM Coal reported headline earnings of R391 million (F2023: R1 535 million), driven mainly by a reduction in the realised coal price at GGV and PCB of 33% and 36%, respectively. GGV Mine’s headline earnings were R331 million (F2023: R540 million). PCB headline earnings were R60 million (F2023: R995 million).
